Elon Musk: Twitter is Going to Be Cash Flow Positive in Q2 of This Year
Elon Musk spoke at a Morgan Stanley conference yesterday and talked about Twitter and Tesla. The discussions were primarily focused on Twitter - which is pretty relevant as Morgan Stanley was one of the institutions that loaned Elon a total of $13bn ($3.5bn of it from Morgan Stanley).
In their talk, Elon said that Twitter might be cash flow positive in Q2. Twitter's projected costs in 2023 are $3bn - 1.5bn less than the 4.5bn estimate from before his takeover.
What's Driving Their Return to Cash Flow Positive?
I love digging into businesses and looking at their cash flow matrix. This is one of the most fascinating things that public companies provide us - a true look into the health of the business, if you know where to look.
The problem with Twitter is that it is no longer a public company. It no longer has public statements that need to be reported to shareholders. This means that we have limited access to financial data about the company.
Elon is giving us a look into their current and future projections but that's really all we can get as outsiders looking in.
Elon talked about a massive decline in advertising - we all saw this happen. Advertisers left Twitter and denounced it, citing that there is bad content on Twitter now since Elon is not partaking in the virtue signaling removal of all "bad actors" from Twitter. Less censorship is a bad thing to advertisers.
But really, it's not just that. There is virtue signaling going on in just the idea of not advertising on Twitter. Even Apple talked about removing Twitter from the App Store.
It's no secret that the mainstream hates Elon Musk. They made it that much more blatantly obvious since his takeover of Twitter. Even celebrities talked about leaving the platform.
- Cost Cutting
- New & Better Revenue Streams
Cost Cutting
Elon has led a revolution in the tech space. Even companies like Facebook are using Elon Musk's takeover of Twitter as aircover to lay-off massive amounts of employees.
The biggest news cycle we've seen in 2023 has been Elon firing people at Twitter. The company had way too many employees and you can even find some funny videos online where people posted "a day in the life as a Twitter employee" before Elon's takeover. It was all cappucinos in the clouds and doing a whole lotta nothing.
Elon came in and made sure that dream was ended quickly. Now Twitter is running a lean team and they've pushed more features in the last few months than in the last few years under the old leadership.
Software companies can run incredibly lean. I've learned this in running the LeoTeam and building out our core developers and team members. You don't need dozens of employees, hundreds of employees let alone tens of thousands of employees to build great software.
Elon wasted no time in coming in and cutting costs. If you've heard him talk about Twitter in the past, then you'll know he said it was on the brink of death. Coming in and having a swift hand is what was needed to save the company. I believe in being able to turn the ship quickly when things aren't going right. Elon is the grandmaster wizard of business and he is just flexing his muscles once again.
New & Better Revenue Streams
$8 a month has become a massive meme but it's also become a massive source of revenue for Twitter.
Software companies NEED to leverage monthly subscription revenue. Recurring revenue is one of the best ways to bolster the financial health of a company.
Looking at Coinbase, you can see them making a leap into this with Coinbase One.
This is a great move by Twitter. Recurring revenue is a huge deal and I think the $8 a month will end up being one of the key things that saves the company and turns it into a profit machine. Hell, even Zucks had to step out and copy him with FB's $11 / mo program.
Elon also said that he's working on more targeted advertising - allowing advertisers to target users based on keywords and interest.
"Twitter was 'poorly monetised', with it making 5 to 6 cents per hour per user, he said, adding that he hoped to raise this to at least 15 cents an hour."
I've always been a huge fan of Elon. He's a controversial guy - but then again, all great people are controversial in one way or another.
Watching him take over Twitter and turn it into a cash flow behemoth has already been fascinating and I think we're in for a whole lot more action. Stay tuned.
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It will be interesting if he gets Twitter to that point, I have work before with a group of developers and I know you dont need that much staff to develop, Im no developer Im an IT, for Twitter users compare to Hive its the centralization if at any point Twitter has some sort of wallet as centralize they can suspend withdraws at any point, its funny but its like they trying to implement what Hive already has.
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He is going to add in payments this year is my guess. That will help the cash flow since they will be able to instantly tap into a couple hundred million people, many of whom have websites.
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Yeah definitely will be interesting to see what he comes up with
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I can't wait for what twitter will be like in the next two years because he will make Twitter better but I know Leo thread by then thread will be getting the attention it deserves.
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How will Elon realize the monetarysation for the users? Which blockchain will he use?
He doesn’t need blockchain, I bet it looks more like a bank
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Yeah but he always claims to be crypto fan!
He fired everyone so it's to be expected
Thanks for this report @khaleelkazi, Elon Musk's got more than an arrow to his bow and you too, us too! Best+
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To some extent, I think it's normal that Elon Musk has so many detractors and enemies in the world, after all, being controversial is the price of being as innovative and visionary as he is. The changes that Elon has made on Twitter have only given one more excuse for his detractors to speak ill of him, but I think that you have to see things with vision, and from that perspective; I think that many of the changes that Elon is adopting on Twitter, are very positive in general.
If we analyze it in depth, Elon Musk bought Twitter at a fairly high price, and as a businessman that he is, he is interested in the profitability of Twitter; because he knows that this is what will make him able to recover what he was invest in the purchase, for later start focusing on generating profit from there. As with any company that spends a lot of money (and Twitter was an unprofitable company at all), Elon knows that the focus in order to win must be on cost reduction (which is why he fired so many employees who were totally dispensable within the organizational structure) and the generation and optimization of new and better sources of income.
I think Twitter has a great future ahead of it, because in my view, Elon Musk knows exactly what he is doing with all the measures he is taking in the famous and powerful social network.
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He also said they’re making a way for people to earn percentage from advertising revenue for ads that pop within threads.
This is the cardinal truth of mass media. Advertisers pay for the right to censor what they don't like. That's the primary benefit. Thy buy space, time, or access to your offer, they get to tell you what to say and what not to say. Don't listen? You lose revenue. This is the reason Web3 social media is such a big deal.