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- Elon Musk, CEO of Twitter, stated that the company has a chance to become cash-flow positive in the next quarter.
- Since Musk's acquisition, Twitter has seen a decline in advertising revenue.
- Musk stated that the social-media platform is trying to increase ad spending on it.
Elon Musk, CEO of Twitter, said that despite declining advertising revenues, the platform still has a chance to be cashflow-positive in the next quarter.
Musk stated that although it has been a difficult four months, he is optimistic about the future. Michael Grimes, head of Morgan Stanley's global technology investment banking, interviewed him.
Musk, who bought Twitter in October for $44 billion, stated that Twitter was hit by a "massive drop in advertising" because of its cyclical nature and "political" reasons. These comments were not explained by Musk.
Musk said it was "startling" to see how poorly Twitter has been monetized. Musk said that Twitter makes 5 to 6 cents an hour, despite the fact that users spend 130 million hours per day on it. He said that Twitter is currently working to provide "relevant and useful ads" to users and is aiming to increase ad spend to between 15 and 20 cents an hour.
Musk's remarks came after a Friday report by The Wall Street Journal that Twitter's adjusted profits and revenues fell 40% in December because advertisers avoided the social networking site following Musk's chaotic acquisition.
Musk took over Twitter and instituted drastic changes to reduce costs. He claimed that it cost $400 per person to eat lunch, but a former employee later refuted the claim, saying the company spent $20-25 per person each day for breakfast or lunch.
Musk stated in November 2022, that Twitter lost $4 million per day.
Musk is looking for ways to monetize Twitter
Musk announced Tuesday that Twitter had reduced non-debt expenses to $1.5 billion, down from $4.5 billion by 2023. This was partly due to a 40% reduction in its cloud services bill and the closing of one data center. He added that the company faces an annual interest payment of $1.5 billion for $13 billion in debt it incurred to complete the acquisition.
Twitter does not release its earnings publically anymore as it is a private company. It reported an increase of 2% in advertising revenues to $1.08 Billion for the second quarter 2022, which was the last earnings release prior to Musk's acquisition. Refinitiv found that despite the increase, the ad revenue fell short of Wall Street's expectations of $1.22 trillion. Twitter posted a net loss in quarter of $270million, which was a reverse of the $65.6 million profit it made in the same period last year.
Musk is currently working on ways to monetize the platform. Twitter launched the Blue subscription program in November 2022 in order to generate revenue. The program is $8 per month in the US, if purchased through a web browser. It costs more if purchased via Apple and Android apps stores.
The Information reported that around 290,000. users worldwide had paid for Twitter subscriptions in mid-January. According to The Information, this is expected to generate $28 million annually.
Musk stated in February that he would appoint a new Twitter CEO by the end of 2023. At the Morgan Stanley conference, Musk said Tuesday that he anticipates it will take several years to build a company management team.
Insider sent requests for comment outside of regular business hours to Musk and Twitter, but they did not respond immediately.
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By: htan@insider.com (Huileng Tan)
Title: Elon Musk says it’s been ‘a very difficult 4 months’ at Twitter, but that the company has ‘a shot’ at becoming cash-flow positive next quarter
Sourced From: www.businessinsider.com/elon-musk-twitter-cash-flow-next-quarter-advertising-layoffs-2023-3
Published Date: Wed, 08 Mar 2023 06:06:48 +0000
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