After botching Twitter takeover, Musk must now make it pay

Twitter posted revenue of about $US5 billion last year, and in the quarter to June 2022 pulled in little more than $US1 billion, and its net losses widened. Its influence is its largest intangible asset – one that far exceeds its corporate size.

Since Musk began his Twitter ownership journey, the company’s financial challenges have only increased.

As part of Musk’s takeover, Twitter added $US13 billion ($20 billion) of debt.

And according to analysts, the takeover will increase its annual interest payments to more than $US1 billion, compared with $US51 million in 2021.

He claims he is buying Twitter to help humanity rather than make more money. There remain question marks over both those aspirations.

And those banks that financed Musk will be hamstrung in their attempts to onsell that debt in the current environment.

Clearly Musk will be under intense pressure to cut costs including staff – a move that has already been discussed widely.

He has already sacked the company’s three most senior executives including the chief executive, Parag Agrawal, the chief financial officer, Ned Segal, and the head of legal policy, trust and safety, Vijaya Gadde. Reportedly at least one of the trio was escorted by security out of head office. Together they will walk away with $US122 million in golden parachutes.

Musk denied rumours that 75 per cent of Twitter’s workforce would be slashed, but he has also noted that revenue coming does not cover the costs of running the business and that this is not ideal.

He needs to increase Twitter’s user base, he has to monetise it, and he wants it to evolve into a platform which is used for more than social media: a US version of China’s ubiquitous WeChat.

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The difficulty for Musk, as a longtime proponent of free speech, he has been a critic of Twitter’s move to moderate content.

But he needs to balance his plans for a “digital town square” for all-comers with the concerns from advertisers that don’t want to be associated with fringe elements whose posts offend the broader community of users.

Musk said he didn’t want the platform to become a “free-for-all-hellscape where anything can be said with no consequences”.

Currently, Twitter receives the lion’s share of its revenue from advertising. Reuters recently reported that some of Twitter’s heaviest users – celebrities, politicians and media – have been ghosting the platform. And speculation is rife that Musk has made increasing subscription charges for verified profiles an urgent priority.