news agency
How will Elon Musk seek to make Twitter more profitable?

How will Elon Musk seek to make Twitter more profitable?

Since going public in 2013, Twitter has only been profitable sporadically. Does his purchase by Elon Musk offer more positive financial prospects for the social network?

In mid-April, the billionaire stated during an interview at the Ted2022 conference that his decision to buy the company was not financially motivated.

“It’s not a way to make money,” said Tesla’s number one. “I just have a strong intuition that having a platform that is public and open to the largest number of people is extremely important for the future of our civilization,” he said.

Some options if you need to escape from Twitter now that Elon Musk has taken over that social network

On the New York Stock Exchange, for just under 9 years, Twitter had losses every year, with the exception of 2018 and 2019, when the group made just over $1 billion in profit.

Bought by Musk for $44 billion, it is a small company compared to Facebook, whose market capitalization is more than $500 billion.

Twitter’s revenues mostly come from advertising, but the platform doesn’t attract enough Internet users to earn significant revenue.

Mastodon: This is how the social network works that could be the alternative to Twitter if users reject the news promised by its new owner Elon Musk

At the end of 2021, Twitter had 217 million “monetizable” users, that is, exposed to advertising on the platform, far from the almost 2 billion users of Facebook.

Twitter will publish its first-quarter results on Thursday. Wall Street forecasts an earnings per share of three cents and a turnover of 1.2 billion dollars.

not lose money

Although profitability does not seem to be Elon Musk’s priority, the world’s richest man will at least seek not to lose money, especially since part of the purchase will be financed with his own funds.

In a document presented to the stock market authorities last week, the businessman said he had 46.5 billion dollars: 21 billion of his personal fortune and the rest of loans from the Morgan Stanley bank and a banking group made up of Société Générale and BNP Paribas.

Why Elon Musk was interested in buying Twitter and how it will affect the common tweeter

Musk has not detailed how he plans to increase Twitter’s billing, except for a tweet suggesting lowering the price of the paid version of the network, Twitter Blue, currently at $2.99 ​​per month; grant a certified account to paying subscribers and suppress advertising for those users.

He later withdrew this message.

Another path would be to reduce the number of Twitter employees, which could go hand in hand with his desire to ease content moderation on the platform.

At the end of 2021, the Californian group had 7,500 employees worldwide. According to a study by the New York University business school, Twitter employed about 1,500 moderators in 2020.

It could also look to increase user growth and ad revenue, or add new paid features to the platform.

4 ways Twitter could change under Elon Musk

“He has his own plan in mind,” says Angelino Zino, an analyst at CFRA. “If you can implement a model with subscription offers, while keeping the free options, it could work,” he added.

Increase the level of indebtedness

By financing a significant part of the purchase with credits, Musk will increase Twitter’s debt level.

The S&P financial rating agency indicated on Monday that it could lower the social network’s credit rating, currently at BB+, several notches and put it on a negative outlook.

For Zino, the main question is not so much Twitter’s debt but how Musk’s personal contribution will be realized.

The millionaire could associate with other investors so as not to compromise only with his fortune.

“If he manages to incorporate other bright spirits” into the company “it will probably increase his chances of success”, Zino concluded. (I)

Source: Eluniverso

You may also like

Hot News

TRENDING NEWS

Subscribe

follow us

Immediate Access Pro