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Revenue down 40% in Decemeber. Extrapolate that to an entire quarter (last year Q4 was 1.57B) means 942M of quarterly revenue. Out of that, he needs to pay some
by jurassic 4y ago
Revenue down 40% in Decemeber. Extrapolate that to an entire quarter (last year Q4 was 1.57B) means 942M of quarterly revenue. Out of that, he needs to pay something like 1.25B/4=312.5M (maybe more? Seems like some of the debt is variable rate) in interest on the loans he used to acquire the company. That’s 30% of revenue just needed to service Elon’s debt.
That leaves $629M/quarter with which to operate the business which cost 1.38B to run in Q4 2021. Has he slashed operating costs by >55%? He fired 75% of employees but there are plenty of non-payroll costs as well that are harder to trim (real estate, storage and compute costs, etc). That’s what “trending toward break even” would look like.
It all sounds pretty insane to me. But just imagine what the TWTR stock would have done if the last CEO had cut costs even a little without Elon’s debt weighing the balance sheet down and Elon’s erratic behavior scaring advertisers away. I think it shows Twitter could have very easily turned a healthy profit if that had been their priority. It was not a company in financial crisis as Musk apologists sometimes like to suggest.
- kibwen 4y ago> real estate Reports began surfacing as early as December that Musk is refusing to pay rent for Twitter's offices (https://www.cnbc.com/2022/12/13/twitter-reportedly-hasnt-paid-rent-on-its-office-spaces-for-weeks.html https://www.cnbc.com/2022/12/13/twitter-reportedly-hasnt-pai...), so we already know what his tactic is there. One might even be sympathetic, were it not for the fact that he also nixed WFH and ordered everyone back into the offices that he now refuses to pay for.
- jurassic 4y agoI’m never sympathetic toward billionaires that don’t pay their bills.
- tablespoon 4y ago> Reports began surfacing as early as December that Musk is refusing to pay rent for Twitter's offices... And what's the strategy there? Isn't the best that can be expected is Musk kicks the can down the road, and in the end pays the rent plus $$$ in legal fees? I'm sure someone will say Musk is a billionaire and they can weasel out of anything in the legal system, but he wasn't able to do that for the Twitter acquisition and wouldn't a lease be a pretty air-tight contract?
- lesuorac 4y ago> And what's the strategy there? Isn't the best that can be expected is Musk kicks the can down the road, and in the end pays the rent plus $$$ in legal fees? I mean if you don't have any money right now; paying $X+N later sounds better than paying $X now when you don't have X.
- lamontcg 4y agoNo, the best outcome is actually that Musk is in a negotiable position since due to office vacancies those properties would just sit vacant. That means he likely can manage to settle for less than his current rent because the owners will be willing to negotiate -- because some money is still better than no money.
- lokedhs 4y agoThey tried that with their Singapore office and the landlord just walked the staff out of the building. Apparently that caused them to pay up pretty quickly. https://news.yahoo.com/twitter-employees-escorted-singapore-office-150300372.html https://news.yahoo.com/twitter-employees-escorted-singapore-...
- blitzar 4y ago> I think it shows Twitter could have very easily turned a healthy profit if that had been their priority Standard tech business model - reinvest all the profits into growth.
- Semaphor 4y ago> He fired 75% of employees Wouldn’t that allow them to massively downsize wrt real estate?
- jurassic 4y agoEventually they can downsize, but corporate leases are usually signed for very long terms because of all the investment in “building out” the space to meet a company’s customized needs. You can’t just snap your fingers and walk away from these lease agreements.
- Semaphor 4y agoAh, yeah, I forgot about that. Still, that should allow for decent reductions in the future.
- lapcat 4y agoAt the same time he also demanded that everyone return to the physical office, in a company that prior to acquisition had committed to permanent WFH for anyone who wanted.
- PM_me_your_math 4y agoTwitter lost 500MM to 1000MM a year for the last 12 years. Not a company in financial crisis? In what universe?
- blitzar 4y ago> Twitter lost 500MM to 1000MM a year for the last 12 years. That did not occur in this universe
- pavlov 4y agoAccumulated past losses are typical for growth companies. Uber has about $33 billion in accumulated losses on its balance sheet. It's not any kind of automatic death sentence, just a sign that investors really wanted to pour money into this company over a long period of time.