Elon Musk’s recent acquisition of Twitter has raised concerns about the company’s financial viability. After purchasing Twitter for $44 billion, Musk inherited a company that had been struggling to turn a profit and attract new users. Twitter’s advertising revenue, which was nearly 90% of its last year’s income, has seen a significant drop as many advertisers pause their spending amid concerns about the platform’s future under Musk’s leadership. Despite efforts to reduce costs by cutting half of the staff and introducing a subscription service, Twitter Blue, Musk has warned that bankruptcy could be a possibility for the social media giant.
- Elon Musk acquired Twitter for $44 billion, taking on a company with a history of financial losses.
- Twitter had less than $600 million in net debt prior to the acquisition but now carries $13 billion in debt.
- The company’s operating cash flow was just over $630 million last year, with potential interest payments reaching $1 billion annually.
- Twitter experienced a massive drop in revenue, losing over $4 million a day according to Musk’s tweets.
- Many advertisers have paused spending on Twitter, impacting its main source of revenue.
- Musk implemented cost-cutting measures, including laying off about 3,700 employees, which could save around $860 million annually.
- The layoffs may harm the company as critical personnel such as engineers, developers, and marketers have been let go.
- Twitter Blue, a subscription service, is an attempt to add new revenue but its success remains unclear.
- Musk mentioned that bankruptcy is a possibility if financial challenges persist.
- Options to avoid bankruptcy may include raising equity or buying back debt at a discount, though these are not Musk’s preferred solutions.
- Musk’s own investment in Twitter amounts to $27 billion, which could be at risk if the company goes bankrupt.
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