Chief Twit Elon Musk has made it to the news almost every day since his $44 billion Twitter takeover was completed. This is not because the platform's users are excited about the world's richest man taking over the platform. Instead, it is due to the confusing, continuous changes he has made to the micro-blogging site ever since he took over the reins.
These changes have affected all sections of Twitter, and even the public perception on the social media giant's profitability. Although one can argue that the drastic changes are aimed at a complete overhaul of Twitter's growth strategy, the general sentiment among users and experts is that Musk is clueless as to what he is doing.
Musk's Misadventures
What started out as an aim to “free the bird” has now transformed into a mockery of events, with new changes rolling out every now and then. Within hours of the takeover, Musk removed many of Twitter's then top executives, at a great cost to the company. After meddling with the core team, the billionaire made several key changes aimed at product features.
The blue tick became a subscription service, and its cost was a matter of a comic debate. An 'official label' was announced, then quickly retracted. Layoffs were carried out at such a large scale that 90 per cent of the company's workforce in a leading market like India was fired at once. This was followed by more of Musk's incessant, megalomaniac banter on his 'official', and not 'parody', Twitter account.
If this was not a sore enough sight, many executives have reportedly tendered their resignations in the past few hours. All this has become a major source of worry for a section of Twitter's important stakeholders – the advertisers.
Advertisement Woes
Before the Tesla and SpaceX owner entered the scene, Twitter was happy to view advertisements as major source of its revenue. However, the new boss had different plans in mind. The monetisation of the blue tick was a tricky step in this direction – to find new revenue streams. However, things are not quite going according to Musk's plan. In fact, it's fair to say that the plan has backfired.
The turbulence at Musk-led Twitter has now culminated in some top advertisers pulling out their campaigns off of Twitter. According to a Reuters report, Chipotle Mexican Grill recently pulled back its paid and owned content, joining other companies like General Motors. The former reasoned that a step back is required to gain “a better understanding on the direction of the platform under its new leadership.” Losing out on existing revenue streams is never a good idea, and definitely not when the company is in deep debt and its existing cashflows struggle to complete the due interest payments.
Bankruptcy On The Cards?
Amid rising confusion among his own employees at Twitter, Musk recently hosted an all-hands meeting at the San Francisco headquarters of his latest acquisition. Remaining true to his dramatic nature, the billionaire made some shocking comments at this meeting. He, as per The Verge said, “We just definitely need to bring in more cash than we spend. If we don’t do that and there’s a massive negative cash flow, then bankruptcy is not out of the question.” One of the most popular social media platforms facing the threat of bankruptcy after being acquired by the world's richest man is not something investors would find appealing.
As per the Reuters report, Twitter's debt stands at $13 billion and there's a significant amount of interest payment due over this as well. If this alone paints a sorry picture to Twitter's shareholders, the fact that Musk recently sold Tesla shares worth billions, makes it much worse. There is no doubt that shareholders are not happy with the company's present financial situation.
Daniel Ives, a senior analyst at Wedbush Securities, told CNBC, “They [shareholders] remain the ones that have been punched again and again by the Musk Twitter antics and the stock now is deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory.”
Adding salt to the wound, Musk's seemingly thoughtless actions have also brought the company under the US Federal Trade Commission’s (FTC) scanner. The commission has affirmed that it is closely watching Twitter with “deep concern” after many top executives quit, potentially putting the company at the risk of violating regulatory orders.
Blue Bird Bleeding
There is no doubt among anyone who has been following the recent Twitter saga that Musk's actions can potentially harm the company a lot. The debt-financed purchase has been followed by reckless decisions that have turned many of the company's stakeholders critical of its new CEO.
It is important to highlight here that there is nothing wrong in attempting to transform a leading social media platform. However, single-handedly making drastic decisions for what was touted to be the 'digital town square' of the world was never a smart idea. The world's richest man seems to be in a hot pursuit to prove this very point.
