Since Twitter went public in 2013, it has occasionally turned out a profit, even if it has a commanding role in the culture and politics worldwide.
The announcement by the company that it had reached a deal for Tesla’s boss Elon Musk to buy it outright has raised questions of whether it will lead to a brighter financial future for Twitter or not?
Musk has downplayed economic considerations as a motivation for his purchase, saying earlier this month at the TED 2022 conference, “This is not a way to make money.”
In his speech, he continued, “It is just that my strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization.”
Twitter has been listed on the New Your Stock Exchange for just under nine years and has posted a net loss each year, except in 2018 and 2019, when it made over $1 billion.
Musk paid above $44 billion to acquire the company, dwarfed by Facebook’s valuation of more than $500 billion.
Twitter’s revenues are usually derived from advertising, not its user base, which is not large enough to make up its finances.
At the end of 2021, it claimed 217 million so-called ‘monetizable’ users exposed to advertising on the platform, far from the 1.93 Billion Facebook subscribers.
Even if Twitter’s business prospects may not be his top concern, the world’s richest man will look to at least not lose money, primarily since part of the acquisition could be financed by his funds.
During securities filing, which was released, Musk pointed to a $13 billion debt facility from a financing consortium led by Morgan Stanley. In addition, there was a separate $12.5 billion margin loan from the same bank along with $21 billion from his fortune being behind the deal.
Although, Musk has not yet provided a detailed idea about how he intends to increase Twitter’s revenue.
There’s a possibility Musk could be looking to accelerate user growth and thus advertising revenue or add new paid features to the platform.
We are looking forward to his action plan and how he thinks about increasing Twitter’s revenue.
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