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Why Twitter lost more than half of its value after the purchase of Elon Musk and what is its future

Elon Musk bought Twitter five months ago for $44 billion. Today, the Tesla founder estimates that the social network is worth $20 billion. What happened?

well did you know Musk to their employees in an internal letter that was sent by email. Media such as “The Wall Street Journal” and “The New York Times” had access to the document.

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Is Twitter on its way to bankruptcy?

In November last year, Musk He talked about the possibility of the platform entering into bankruptcy. The claim was made through a call to company employees, Bloomberg News reported.

He also warned that the company could lose billions of dollars by 2023.

That time, Musk indicated that the company was losing more than $4 million a day.largely because advertisers started leaving once he took over the company.

In December 2022, a total of 72 of 102 Twitter advertisers had moved away completely.

But unlike last year, in last week’s message Musk does not imply an imminent bankruptcy of the company, but does mention that more sweeping changes will need to be implemented to avoid bankruptcy of the company.

A phone screen displays a photo of Elon Musk with the Twitter logo in the background, in Washington, DC. (Photo by OLIVIER DOULIERY / AFP) (OLIVIER DOULIERY /)

In the letter, Musk told his employees that Twitter it is “transforming so rapidly” that it can now be considered “a reverse start-up”.

Musk He also informed the employees about a compensation program in shares, which will now be calculated according to the new value of the company, the EFE agency indicates.

In the internal document, Elon Musk justified the brutal loss of value of the company due to the financial difficulties the group is experiencing.

Musk indicated that the social network was in a precarious economic situation and was “four months away from running out of money” because, according to him, “Twitter was destined to lose 3 billion dollars year”.

He explained that this figure is reached by a turnover loss of 1,500 million dollars and debt maturities for another similar amount, reports the AFP agency.

“But now that advertisers are coming back, it looks like we’re going to break even in Q2 2023,” said Musk.

The strategy to generate income

In addition to struggling to find the return of advertiserswhich until 2021 represented more than 88% of Twitter’s revenues, Elon Musk has taken radical steps to make the business profitable.

One of the most important and controversial was the reduction of the workforce from the group of 7,500 employees to less than 2,000resorting to successive waves of layoffs.

Also sold much of the furniture at the San Francisco headquarters. Chairs, tables, computers, signs, coffee machines, among others, were publicly auctioned to raise money.

Twitter Blue is another of the strong bets of Elon Musk to generate income. Since April 1, the monthly plan to verify accounts on the social network is in force.

The cost of maintaining the blue checkmark ranges from $8 per month for individual users to a starting price of $1,000 per month for an organization, plus $50 per month for each affiliate or employee account.

In addition, as of April 15, only verified accounts in Twitterthat is, those that pay, may be recommended to other users.

Source: Elcomercio

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