The motive why Elon Musk has to act speedy in chaos: Twitter owes too much!

10 November 2022

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The hobby that Twitter will pay yearly extended from less than $a hundred million to $1.2 billion after Musk took over.

considering the fact that officially ultimate the acquisition of Twitter for $ 44 billion on October 27, Elon Musk has wasted no time in reworking the social community with the maximum users in the usa.

He fired maximum of the senior management group (which include the CEO and CFO), fired half of of the body of workers through simply 1 electronic mail, introduced the repeal of the "work from anywhere" policy, mandatory personnel must go back to the office after years of working remotely. so that it will growth revenue, Musk officially closed the choice of charging 8 USD / month for green debts.

in keeping with Bloomberg, there may be a motive in the back of this rush: Twitter has a variety of big payments to pay. that is a leveraged buyout (LBO), wherein Musk uses borrowed cash to buy Twitter and the social community's very own belongings as collateral.

Twitter's debt has skyrocketed to $13 billion, even as earlier than the deal Twitter owed $1.7 billion (such as junk bonds with a few other convertible debt securities). As a end result, Twitter's annual hobby bills improved from much less than $a hundred million to $1.2 billion after Musk took over. This interest is likely to retain to swell due to the fact half of the debt has a hard and fast interest price and could increase with the market.

From 2019 to now, Twitter has now not been worthwhile for the complete year and in 2022 the photo isn't always brighter. inside the 2d zone, this social community published a internet loss of $270 million and is expected to lose greater than $2 hundred million in the third zone.

Of direction, Musk is aware of Twitter's budget well and is aggressively cutting returned on what he considers redundant. cutting staff in half is the easiest way to reduce charges. ultimate yr, worker inventory bonuses price Twitter $630 million, or 12% of general revenue.

further, Musk also plans to close many places of work and requires Twitter to store $ 1 billion a year through slicing infrastructure-associated costs, according to Reuters. meaning Twitter will spend less money on cloud computing services in addition to renting a server vicinity.

but slicing costs quickly is not the first-class manner to be worthwhile, because doing so will more or less affect the organization's potential to discover higher ways to make extra cash in the future. destiny. almost all advertising, communique, and human rights departments could be removed - with a view to make it hard for Twitter to draw and retain users and advertisers.

ultimate weekend, the unexpected layoffs of 3,seven hundred humans created a mess. Dozens of employees had been bewildered once they were called returned by the employer because they were mistakenly fired. Funnier, a few have been known as again because their superiors found out Twitter nonetheless needed them to expand a number of the brand new features Musk wanted.

Musk is asking his subordinates to paintings to restore Vine - the short video app that Twitter has shut down considering the fact that 2016 however Musk hopes this will be an possibility for the agency to have more advertising money. Twitter is also growing a separate product that lets in users to charge folks that watch their videos.

Such video products will price Twitter more to host, but Musk clearly desires them to work in part due to the fact Twitter's present day enterprise version has suddenly come to be "fragile."

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The whole on line advertising and marketing enterprise is dealing with loads of difficulties, and many advertisers aren't reassured whilst Twitter is in Musk's hands. a gaggle of huge brands like Volkswagen, Pfizer and popular generators have stopped spending cash. Musk himself have to admit this induced a pointy drop in sales.

not preventing there, a few advocacy groups are encouraging brands to "prevent playing" with Twitter if Musk eliminates a few regulations to manipulate incorrect information and hate speech. The leaders with the deepest relationships with advertisers have all been fired.

It isn't difficult to comprehend that Musk is underneath incredible strain. He has continually been a person who loves to act rapid and robust. but with the mountain of debt and chaos Musk has brought to Twitter, it's the simplest option this time around.

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