Don’t blame Elon Musk, he is saving Twitter: Wholeheartedly hope the company breaks even next year, the things just done are also to prevent the worst scenario

With changes made recently, including efforts to cut costs and increase revenue from followers, Elon Musk hopes Twitter will be able to close to breakeven next year.

Twitter once planned to announce negative cash flow of $ 3 billion a year before announcing thousands of job cuts to cool down spending, according to the WSJ. Share-based compensation for Twitter employees cost 630 million USD last year, equivalent to 12% of total revenue.

“That’s why I’ve spent the past 5 weeks cutting costs like crazy,” Musk wrote on Twitter Spaces. “The things I do seem odd at times, but it is also to prepare for the worst-case scenario. Basically, Twitter is like an airplane going straight to the ground while the control system is not working.”

According to the WSJ, Twitter has not been profitable since 2019 and posted losses for eight straight years in a decade. By 2021, the loss begins to shrink to $221.4 million from $1.14 billion a year earlier.

“Regarding Twitter’s workforce reduction, we have no choice as the company is losing more than $4 million a day,” Musk tweeted on Friday.

With the changes recently made, including an effort to cut costs and increase revenue from its followers, Elon Musk hopes the company will be able to close to breakeven next year.

“Twitter will be fine next year,” Musk said.

In October, Musk reached a deal to buy Twitter in a deal worth $44 billion, which left the social networking platform with nearly $13 billion in debt. In addition, the company will likely have to pay a minimum of $9 billion in interest to banks and hedge funds over seven to eight years, before the debt matures. This made Musk afraid, and warned of a prospect of “a huge drop in revenue”, even bankruptcy.

To prevent this scenario, Musk said he is trying to keep advertisers on the platform after the “great migration” last month, such as convincing them and making legal requirements. physical. Many people want to see strong return on investment plans, he said.

In addition, according to Reuters, Musk is also planning to close some offices and ask the company to save $ 1 billion a year by cutting infrastructure costs. Investment capital for server space and cloud services will accordingly shrink.

“In good times, there’s a lot of advertising budget, and you can avoid unclear ROI. However, when the company is in trouble, tough questions are immediately raised. If you don’t have a clear answer, advertisers won’t choose you because they’re sober,” Musk said.

It is known that Musk has announced the end of the remote working policy and forced employees to return to the office. Several initiatives to improve revenue for Twitter were also proposed by Elon Musk, according to Bloomberg.

Currently, one of Musk’s most notable plans to boost Twitter is a monthly subscription service with utilities, including a green check for $8/month. Musk also asked employees to try to revive Vine, the short-form video app that has been dead since 2016 for more advertising opportunities.

In addition, Twitter is also developing a separate product that allows users to charge their video viewing accounts. However, such video products will come with additional storage costs.

However, according to many experts, cutting costs quickly may not be the best way to improve profits. The cuts, which include almost completely wiping out marketing, communications, human rights and celebrity partnerships, could make it harder for Twitter to retain users and advertising partners.

The proof is that right after abruptly laying off 3,700 employees over the weekend, Twitter had to beg them to return. Some were asked to return by mistake during the staffing process. Others have been criticized by Twitter because they think their extensive experience is necessary to build new features for the platform. The identities of these employees are currently being kept confidential.

Whether Musk is doing well or not as CEO at Twitter is still a question mark. In addition to trying to revive a social networking platform that has suffered losses for many years, the billionaire also sometimes behaves oddly, for example, just creating a poll on Twitter for users to decide if he can should give up the role of the head of the social networking platform.

“Should I step down as Twitter leader? I will follow the results of this poll,” Musk posted and apologized, and announced that in the future, he would hold votes before making a decision.

After about 10 hours, the poll post had nearly 5 million votes, of which, 57.8% agreed that Musk should leave the position. According to Forbes, this is one of the “craziest” moves Musk has ever made because he is so confident about the support around him.

Earlier, Elon Musk also confirmed that he would not take on the role of Twitter CEO forever: “I plan to gradually relax my time at Twitter and find another CEO,” Musk said.

By: WSJ, Bloomberg