Elon Musk Says Twitter ‘Will, In Fact, Be OK Next Year’
Elon Musk
said Twitter Inc. was on track to post negative cash flow of $3 billion a year before the company slashed costs in part by cutting thousands of jobs.
“That is why I spent the last five weeks cutting costs like crazy,” Mr. Musk said during a Tuesday evening conversation on Twitter Spaces. “That’s the reason for my actions. They may seem sometimes spurious or odd or whatever. It’s because we have an emergency fire drill on our hands.”
“This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work,” he said.
Twitter hasn’t booked an annual profit since 2019, and posted a loss in eight years of the past decade. The company’s net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year.
With the changes recently implemented at the company, including the cost-cutting efforts and the building of subscriber revenue, Mr. Musk said he expects the company will be roughly cash-flow break-even next year.
“I now think that Twitter will, in fact, be OK next year,” he said.
In October, Mr. Musk, who also serves as CEO of
Tesla Inc.,
closed his deal to buy Twitter in a deal valued at $44 billion, saddling the company with nearly $13 billion in debt.
The company may have to pay at least $9 billion in interest to banks and hedge funds over the next seven to eight years, when the $13 billion in debt matures, according to a review of Twitter’s loans.
Mr. Musk has bemoaned Twitter’s financial situation before. Last month, he said Twitter had suffered “a massive drop in revenue” and was losing $4 million a day. He later invoked the specter of bankruptcy.
Layoffs at the company began about a week after Mr. Musk closed the deal. There were also mass resignations last month, after Mr. Musk asked employees to commit to working intense hours or take a severance package. Mr. Musk on Tuesday said Twitter is at “a little over 2,000 people” after job cuts and previously had close to 8,000.
Mr. Musk also addressed his efforts to keep advertisers on the platform after an exodus last month. He said Tuesday he has spoken with a number of advertisers, and that they have made reasonable requests. Many, he said, want to see strong return-on-investment plans.
“In prosperous times, there is plenty of budget for advertising and you can get away with unclear ROI, but when times are tough, then the hard questions of return on investment are asked,” he said. “And when you do not have a clear answer then advertisers don’t want to advertise because they’re being sane.”
Mr. Musk has been pushing to make Twitter less dependent on advertising, which has accounted for about 90% of company revenue. Twitter on Dec. 12 relaunched the company’s paid-for subscription service after several false starts, charging users that sign up from an
Apple Inc.
mobile device $11 a month and those joining via a web browser $8 a month.
—Meghan Bobrowsky contributed to this article.
Write to Will Feuer at [email protected] and Alexa Corse at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Elon Musk
said Twitter Inc. was on track to post negative cash flow of $3 billion a year before the company slashed costs in part by cutting thousands of jobs.
“That is why I spent the last five weeks cutting costs like crazy,” Mr. Musk said during a Tuesday evening conversation on Twitter Spaces. “That’s the reason for my actions. They may seem sometimes spurious or odd or whatever. It’s because we have an emergency fire drill on our hands.”
“This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work,” he said.
Twitter hasn’t booked an annual profit since 2019, and posted a loss in eight years of the past decade. The company’s net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year.
With the changes recently implemented at the company, including the cost-cutting efforts and the building of subscriber revenue, Mr. Musk said he expects the company will be roughly cash-flow break-even next year.
“I now think that Twitter will, in fact, be OK next year,” he said.
In October, Mr. Musk, who also serves as CEO of
Tesla Inc.,
closed his deal to buy Twitter in a deal valued at $44 billion, saddling the company with nearly $13 billion in debt.
The company may have to pay at least $9 billion in interest to banks and hedge funds over the next seven to eight years, when the $13 billion in debt matures, according to a review of Twitter’s loans.
Mr. Musk has bemoaned Twitter’s financial situation before. Last month, he said Twitter had suffered “a massive drop in revenue” and was losing $4 million a day. He later invoked the specter of bankruptcy.
Layoffs at the company began about a week after Mr. Musk closed the deal. There were also mass resignations last month, after Mr. Musk asked employees to commit to working intense hours or take a severance package. Mr. Musk on Tuesday said Twitter is at “a little over 2,000 people” after job cuts and previously had close to 8,000.
Mr. Musk also addressed his efforts to keep advertisers on the platform after an exodus last month. He said Tuesday he has spoken with a number of advertisers, and that they have made reasonable requests. Many, he said, want to see strong return-on-investment plans.
“In prosperous times, there is plenty of budget for advertising and you can get away with unclear ROI, but when times are tough, then the hard questions of return on investment are asked,” he said. “And when you do not have a clear answer then advertisers don’t want to advertise because they’re being sane.”
Mr. Musk has been pushing to make Twitter less dependent on advertising, which has accounted for about 90% of company revenue. Twitter on Dec. 12 relaunched the company’s paid-for subscription service after several false starts, charging users that sign up from an
Apple Inc.
mobile device $11 a month and those joining via a web browser $8 a month.
—Meghan Bobrowsky contributed to this article.
Write to Will Feuer at [email protected] and Alexa Corse at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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