Elon Musk is not buying Twitter to make more money: he's doing it to help humanity. In a message to advertisers last week, the world's richest man said it was important to the future of civilisation to have a "common digital town square". But it's going to cost money, given that Musk has paid $44bn for a social media platform to achieve that aim.
The new business will carry $13bn of debt that helped fund the acquisition, and interest payments on it will need to be met - a tricky task given that Twitter generates more controversy than it does cash. In its most recent results, Twitter reported negative free cashflow (spending more cash to run the business than it takes in) of more than $120m.
"He'll either need to dramatically reduce expenses, or significantly increase revenue, or both," said Drew Pascarella, a senior lecturer on finance at Cornell University in New York state.
Can Musk grow the revenue and expand the number of users - more than 238 million - without alienating advertisers or pushing away the new sign-ups that will help make the platform a truly representative town square? Advertisers will not want to put money behind a fractious, ultra-divisive platform, and would-be Twitter newbies will not want to join it either.
Since he first invested in the company, Musk has sketched out a loose vision for its future: block the spambots, protect free speech and build an "everything app".
The first goal became central to the legal wrangling over the takeover.
When the bid was first announced, Musk cited "defeating the spambots" as one of his core aims.
This story is from the November 04, 2022 edition of The Guardian Weekly.
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This story is from the November 04, 2022 edition of The Guardian Weekly.
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