Elon Musk called Twitter “a plane with the engines on fire” and averted a $3 billion crash by letting go of 5,000 of its 7,500 employees.
Elon Musk said on Tuesday night that until he intervened and fired more than half the company, Twitter was on track to have a $3 billion cash flow deficit. Despite everything that is going on, Twitter itself is operating more efficiently and effectively than ever thanks to a huge drop in bot activities.
“That is why I spent the last five weeks cutting costs like crazy,” Musk said during a Twitter Spaces event. “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.“
Musk has been on a mission to cut costs and revamp the social media giant since he paid $44 billion to acquire Twitter in October, financing the deal in part with nearly $13 billion in debt and $1.5 billion in interest payments annually. He claimed that as of early November, the company was losing $4 million every day and was in danger of going out of business.
Out of the company’s 7,500 employees, about 5,000 have been let go, and the remaining employees agreed to a “hardcore” work ethic, Bloomberg reports.
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Over the weekend Musk conducted a straw poll on Twitter asking people if they wanted him to resign as the company’s top executive. About 58% of respondents said yes and Musk has since confirmed he’d step down once an appropriate replacement was found, for a job he’s said anyone would be “foolish” to take.
In the Twitter Spaces event, Musk painted a dire picture of the company’s finances but suggested that he has managed to avert a total meltdown. -Bloomberg
While Musk claimed that Twitter was on schedule to spend about $5 billion the next year, the company’s spending in 2021 came to close to $5.6 billion. Had expenditures not been dramatically reduced, Twitter would be facing at about $6.5 billion in 2023 expenses when combined with the acquisition-related debt repayments.
While the company has $1 billion in cash on its balance sheet, Musk claims that Twitter is now on track to generate about $3 billion in revenue in 2023 – about $2 billion less than the $5.1 billion estimated at the end of 2021.
“I now think that Twitter will, in fact, be okay next year,” Musk continued during the Spaces event, adding that he thinks the company will “roughly” break-even, but that “this will be difficult.”
As reported by Bloomberg, he claims that advertisers have been asking “sane” yet “tough” questions on their return on investment.
Musk has also been making changes to the platform to increase and diversify its revenue, including charging $8 a month for a premium subscription called Twitter Blue. As of mid-November, there were about 140,000 paying subscribers, according to the New York Times.
Twitter has always had a hard time converting conversation among its users into revenue, but with all his antics, Musk has managed to make the company as buzzy as it’s ever been. -Bloomberg
According to Politico, Elon Musk’s “antics” are nothing more than “flimflam stunts,” and they believe it is time to “close down the Elon Musk circus.”