A lot has changed on Twitter since Elon Musk took the helm – for the workforce as well as for the users. The new boss looks primarily at the money. And has a good reason for that.

It’s not about the money, as Elon Musk repeatedly emphasized during the month-long dispute over the Twitter takeover. And although the statement in such an expensive deal did not seem credible even for the richest man in the world, it lost all credibility with Musk’s first official acts. Under the new management, Twitter should finally make money. Because Musk has only increased the financial pressure.

You can feel that in your decisions. Shortly after Musk took over the helm last Thursday, employees and users felt that the wind was changing. Musk has very obvious plans to cut costs while increasing revenue. In a tweet, the boss also openly admitted: “Somehow we have to pay our bills,” he tweeted on Tuesday.

hard finances

The new boss is also responsible for the fact that they are now even higher. Of course, Musk didn’t pay the $44 billion for the short message service entirely out of his own pocket. After all, his $200 billion fortune isn’t lying around in cash, it’s mostly stocks. If he were to sell shares in Tesla or SpaceX, the price would crash. So Musk had to borrow some of the money — and now Twitter has to pay back some of it itself.

Musk charged Twitter with $13 billion. According to the “New York Times”, this means that the company’s interest rates have risen enormously – they now alone amount to one billion dollars a year. While such a failure would not pose a major hurdle for competitors such as Google or Facebook, it is a gigantic problem for Twitter: the group earned just five billion dollars over the past year. And bottom line, it still made $200 million a mess..

income at any cost

So it’s no wonder that in his first week, Musk hardly dealt with the freedom of expression he values ​​so much on his platform and all the more with the finances. The new boss wanted to put 75 percent of the employees out of the office for cost reasons, the “Washington Post” quickly reported at the weekend. Musk denied. But now the ax seems to be set: 3,700 of the 7,000 employees are to be kicked out on Friday, reported “Bloomberg”, citing insiders. It would be more than half the workforce.

Musk also wants to start with the income. “Twitter can’t just finance itself with advertising,” Musk tried to explain on Tuesday when suddenly there was a subscription fee for verified accounts. After initially offering $20 a month for this, the fee has now dropped to $8 after numerous complaints. But there are other payment functions in the room: For example, fees for watching videos or sending direct messages.

Whether this income will be high enough in the long run is completely open. Even if each of the 400,000 accounts verified so far were to pay for the blue stamp, it would only come to $3.2 million a month, or $38.4 million a year. The billion-dollar hole will hardly be able to be filled.

Plunging ad revenue

The fact that the advertising revenue is not sufficient should also be due to Musk himself. With his promise to allow largely unmoderated freedom of expression on Twitter in the future, he scared off numerous advertising customers, and many advertising agencies have paused their bookings out of caution. The market was difficult anyway. As a result of the Ukraine war and its economic consequences, spending on advertising has fallen drastically, and even giants like Facebook have had to make significant losses.

It came at exactly the wrong moment for Twitter. After the group was able to report a profit for the first time in its history in 2018 and managed another good year in 2019, profits plummeted in the Corona year despite increased income. In the last year, the company slowly crawled back to the break-even point. With the Russian attack on Ukraine, this dream was shattered: With a loss of 344 million, Twitter made almost twice as much misery in the last quarter alone as in the whole of 2021.

Musk’s ordeal

The new boss now faces a difficult choice. On the one hand, the important advertisers of all people are not very enthusiastic about the idea of ​​seeing their messages next to potentially extremist, insulting or otherwise problematic statements that correspond to Musk’s idea of ​​free speech. On the other hand, Twitter not only has to recoup its losses, but also has to collect the interest if it doesn’t want to finance the service out of its own pocket. He will have to pay a price – the only question is what it will be.

Quellen:New York Times, Bloomberg, Twitter

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