Twitter owner and CEO Elon Musk is painting a bleak picture of the company’s financial situation.
During an interview on Twitter Spaces, the billionaire voiced optimism about Twitter’s financial prospects for 2023.
However, he described the finances from before his takeover as a burning plane crash.
“Because of the nature of this transaction where there’s $12.5 billion of debt and the Fed rate has been going crazy, there’s on the order of a billion and a half-ish of debt servicing that’s required,” Musk began as he explained the company was on track to lose $3 billion in the next year.
He explained the financial situation is why he “spent the last five weeks cutting costs like crazy.”
Listen to his comments below:
Key moment in this twitter space with @elonmusk – in this clip he explains the current financial situation at @twitter and the reason for his actions lately. pic.twitter.com/YyWZEy5VS7
— TheSonOfWalkley (@TheSonOfWalkley) December 21, 2022
Musk also shared he has been working on getting advertisers to help boost revenue:
“I’ve spoken to a number of the advertisers. Their requests are not fuzzy or irrational or anything. They’re, like, quite reasonable. They’re like, just show us an ROI that makes sense. And I’m like, yes, I agree. If I were in that position, I would also want an ROI that makes sense, especially when we’re headed into difficult economic times where these questions are asked a lot more than in prosperous times.”
After acknowledging why advertisers may be hesitant to advertise on Twitter, he said, “With the changes that we’re making here on massively reducing the burn rate and building subscriber revenue, I now think that Twitter will, in fact, be okay next year.”
“I think we will be … hopefully cash flow break-even. That’s what I expect for next year. But this will be difficult,” he continued. “So that’s the reason for all of my actions, though they may seem sometimes spurious or odd or whatever, it’s because we have an emergency fire drill in our hands.”
Finally, he added, “But if … you’re looking at it from my standpoint and you’re saying, okay, wow, this company is like basically you’re in a plane that is headed towards the ground at high speed with the engines on fire. And the controls don’t work.”
Musk completed his $44 billion purchase of Twitter in October and swiftly made changes to the company, including firing its top executives.
He also laid off nearly half of the company’s 7,500 employees.
On top of decreasing the staff size, Musk relaunched the company’s Twitter Blue subscription plan for $8 per month or $11 for users who paid for it through Apple’s App Store.