Twitter Inc. boss Elon Musk said the platform was on course to hit $3 billion of negative cash flow prior to the recent round of severe cost-cutting.
“That is why I spent the last five weeks cutting costs like crazy,” Musk said during a Twitter Spaces hosted late Tuesday. “This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work.”
Musk bought Twitter for $44 billion in October, partly financing the deal with almost $13 billion of debt with interest repayments of around $1.5 billion a year. He has drastically cut costs including laying off more than half of Twitter’s staff, and has since confirmed he’d step down as chief executive officer once an appropriate replacement was found.
Twitter was on course to post revenue of around $3 billion, with around $1 billion in cash on its balance sheet, Musk said.
“I now think that Twitter will, in fact, be okay next year,” Musk said, and he expects the company to “roughly” hit cash flow break-even. He added that advertisers have been asking “sane” but “tough” questions about their return on investment for buying ads on the platform.
Twitter was on track to record around $5.2 billion in sales in fiscal 2022, prior to Musk taking the company private, according to analyst estimates compiled by Bloomberg before to transaction’s close on Oct. 28.
Shares of Tesla Inc., where Musk is also chief executive, have been under sustained pressure since he bought Twitter. That’s partly on concerns the billionaire is distracted by Twitter and not focused enough on the electric vehicle-maker. Musk has also sold billions of dollars of stock in the last two months. In part, investors are parsing Musk’s willingness to support Twitter financial and service its debt burdens.
Tesla shares gained as as much as 2.7% in pre-market trading in New York, following Musk confirming his intentions to step down. The stock is down around 61% so far this year through Tuesday’s close. Bloomberg