Elon Musk blames Twitter’s cost-cutting on ‘negative $3 billion cash flow’

Elon Musk has defended his financial management of Twitter, arguing that the social media platform would have faced a “negative cash flow situation of $3 billion annually” had it not been for his controversial cost-cutting efforts.

The billionaire businessman, who bought the social media company for $44 billion in October after previously trying to pull out of the deal, offered a glimpse into its dire finances during an online Twitter Spaces forum on Wednesday.

“We have an emergency fire drill on our hands. . .This company is like you’re in a plane heading for the ground at high speed with the engines on fire and the controls not working.” “This is the reason for my actions, which can sometimes seem fake.”

He said the platform was on track to spend about $5 billion in 2023. Total costs at Twitter in 2021, the last annual period the company reported before going private, were $5.6 billion, during which time it levied a pre-tax A loss of $221,409.

Musk predicted that Twitter’s net cash flow, “if you don’t make any changes,” will be around $6 billion to $6.5 billion next year. In part, that’s because the company took on $12.5 billion in debt to help finance the acquisition, which required about $1.5 billion annually in debt-service payments amid rising interest rates, he said.

“Not good because Twitter has a billion dollars in cash,” he said. “And that’s why I’ve spent the last five weeks cutting costs like crazy.”

His statements indicate that the company is on its way to achieving annual revenues of about $3 billion next year. That would indicate that Twitter was on track to generate $2 billion less in revenue in 2023 than the $5 billion it made in 2021 — which came mainly from advertising. Many marketers have quit the platform since Musk’s acquisition due to moderation concerns.

The picture of Twitter’s finances comes after Musk fired about half of its 7,500-strong workforce and stripped employee benefits, raising concerns about whether the company was adequately staffed in areas such as content moderation and compliance.

On Sunday, Musk said in a tweet that Twitter has been “on a fast track to bankruptcy since May.”

However, Musk said on Wednesday that his changes will mean the company will “almost” break even with cash flow.

“With the changes we’re making here around significantly lowering burn rate, building subscriber revenue, I now think that Twitter will, in fact, be fine next year,” Musk said, adding that he had spoken to advertisers who were prodding him to show how he could save money. Twitter return on their investment.

The Tesla and SpaceX CEO has previously indicated that he plans to turn Twitter into an “app for everything,” where users can send money or shop, for example, in an effort to generate new revenue streams, including payments and subscriptions.

However, the attempt to launch a new premium subscription service, Twitter Blue, was fraught with challenges after some users used their paid “blue tick” verification offer to impersonate others, causing the company to pause and restart later. Services.

Late Tuesday, Musk said he would step down as Twitter chief as soon as he finds someone “foolish enough to take the job,” succumbing to the results of a poll of platform users he gave over the weekend.

Musk also indicated that he will continue to run the company’s “software and server teams” after he steps down, noting that he will remain closely involved in the daily operations and product development of the social networking site.

Additional reporting by Richard Waters in San Francisco

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