It’s safe to say that Elon Musk has a lot on his plate right now.
The richest man in the world took out a $20 billion (over $30 billion) loan to buy Twitter. Twitter is a relatively unprofitable social media website idealized by many as a “global town square.”
interest Twitter alone is expected to cost about $1.5 billion annually, according to reports in the New York Times, Bloomberg, and the Financial Times.
But even during the turmoil of the acquisition, Musk didn’t stop posting updates on the platform.
How Musk Acquired Twitter
Perhaps notable from the outset is that Twitter sued Musk in the process and tried to force a sale.
But the story began in January, when Mr. Musk began buying large amounts of Twitter stock.
By April, when he agreed to join Twitter’s board of directors, he had become the company’s largest shareholder. However, he withdrew at the last minute.
Instead, Musk offered to buy the company, but ultimately reached a deal without conducting due diligence on the company’s confidential information.
In the weeks that followed, Mr. Musk had second thoughts. He has publicly complained about the number of spam his accounts on Twitter.
His attorney has since accused Twitter of failing to comply with his request for information on the subject.
As a result of the altercation, Mr. Musk said on Twitter in July that he was terminating the deal.
But four days later, Twitter sued Musk to force the deal to close.
By then, the stock market had plunged on fears of a potential recession.
Twitter accused Musk of buyer remorse, claiming he wanted to cancel the transaction because he thought he overpaid.
Most legal analysts thought Twitter had a good chance of winning in court.
In October, Musk made another turn and offered to complete the deal as promised, just one day before the deadline to avoid going to court against Twitter.
Musk tweeted that “the bird is freed” and took control of the company, sacking CEO Parag Agrawal and other executives.
How profitable is Twitter?
Not as profitable as other big social media companies.
Twitter is a valuable online location used by celebrities, governments and news organizations around the world, but it rarely makes money.
Since going public in 2013, the company has only been profitable in 2018 and 2019.
This is despite millions of users and billions of dollars in revenue. For example, last year he was $7.7 billion.
Most of this money (around 90%) comes from advertisers, and some are starting to take ads.
Why do advertisers seem to be abandoning Twitter?
United Airlines, joining companies like General Motors, outdoor retailer REI, food company General Mills and Audi, is the latest major brand to suspend advertising on Twitter after Musk’s acquisition.
Reports that Musk planned to lay off staff from the beginning raised concerns about the spread of hate speech and misinformation on the website.
He tried to ignore these concerns, saying he was buying the platform to help humanity and didn’t want it to become a “hell at his disposal”.
So why did Musk fire half of Twitter’s employees?
Mr. Musk said he had “no choice” but to lay off workers to cut costs in an attempt to increase the company’s profits.
“When it comes to Twitter headcount cuts, unfortunately when the company is losing over $4 million a day, you have no choice.
But will Twitter’s staff cuts scare more advertisers?
Yoel Roth, head of safety and integrity at the social media company, said the platform’s content moderation capabilities were maintained during his dismissal.
The group least affected by the layoffs is Twitter’s frontline content moderation staff, he added.
Roth said it was important to combat misinformation on platforms ahead of the US midterm elections.
“Tackling the integrity of elections, including combating harmful misinformation and state-sponsored information manipulation that can suppress voters, remains a top priority,” he said.
Mr. Musk blamed the decline in advertising for “activists.”
“Activist groups have managed to significantly reduce Twitter’s advertising revenue, and we’ve tried our best to appease them, but nothing has worked.
He also responded to a Twitter post suggesting an “anti-boycott” of the company, saying, “If this continues, thermonuclear names and disgrace will just happen.”
How will Musk make money from Twitter?
In an April interview, Musk said owning Twitter was “not a way to make money.”
“Twitter has become a de facto town square, so it’s really important that people have both the reality and the perception that they can speak freely within the law,” he said in an interview. said in
But after the acquisition, Twitter announced a monthly subscription service for $7.99. This includes blue checks.
This means that Twitter’s annual revenue is only $17 million. That’s not enough to move the dials for a company that recently reported quarterly earnings of $1.82 billion.
Another idea appears to have surfaced, charging users to watch videos on the platform, The Washington Post reports.
There are also reports that Twitter has revived Vine. Vine is a social short-form video app considered the predecessor of social media giant TikTok.
The subscription blue tick service is expected to end Twitter’s current verification system, which began in 2009 to prevent impersonation of high-profile accounts such as celebrities and politicians.
This has upset a prominent Twitter user, with author Stephen King suggesting the site should pay him.