Elon Musk, who acquired Twitter in a debt-laden $44 billion deal a little over four months ago, said advertising revenue has dropped as much as 50% since he took over.
But the mega-billionaire tech mogul said a few large advertisers have continued to spend with Twitter, and he specifically called out — and thanked — Disney and Apple as remaining two of the biggest marketers on the social network, speaking Tuesday at the 2023 Morgan Stanley Technology, Media and Telecom Conference in San Francisco.
According to Musk, Twitter is improving its ability to serve timely and relevant ads. He said he recently was speaking with David Zaslav, CEO of Warner Bros. Discovery, who asked Musk why Twitter couldn’t put an ad with the trailer for HBO hit show “The White Lotus” next to every tweet that mentions “White Lotus.” Musk responded affirmatively, describing it as basic keyword-based ad buys that Twitter is now selling: “It’s just Google AdWords but applied to tweets.”
Musk painted a dire picture of Twitter’s finances. He said with the drop in ad revenue and the additional debt payments Twitter needs to make (on the roughly $12.5 billion in debt Musk needed to close the transaction), the company was on pace to go bankrupt in four months. The situation required “immediate and drastic action,” Musk said.
In addition to reducing Twitter’s headcount by more than 70%, from 7,500 to below 2,000, the company has consolidated into two data centers (down from three) to reduce cloud expenditures. All told, Twitter has reduced its annualized burn rate (excluding $1.5 billion in debt payments) to about $1.5 billion, down from $4.5 billion previously, while also executing “the fastest product evolution in Twitter’s history,” Musk said.
“There have been a few bumps in the road, but this is to be expected,” Musk said. “Now we have the opportunity to grow [Twitter] into something spectacular.” He added, “I don’t want to jinx it or anything, but I think we have a shot at being cash flow positive in the second quarter.”
Musk said Twitter has a lot of room to improve the way it monetizes time spent on the platform. On a daily basis, Twitter generates 130 million hours of attention from “the smartest people on Earth,” he claimed; currently, however, the company earns just 5-6 cents of ad revenue per hour of that time.
Musk said his goal for Twitter is to be the most timely and accurate source of truth available, “however unpleasant it might be.” A self-described “free speech absolutist” — who has reinstated the accounts of many accounts Twitter previously banned for violating its policies, including Donald Trump’s — Musk reiterated that he sees Twitter as an important vehicle to ensure free speech. “If we don’t have a strong foundation for free speech, I fear for the future of our civilization,” he said.
Today, “the media controls the narrative,” he said, while on Twitter “the public can control the narrative. And that’s a really big deal,” describing the social network as being a “forum for citizen journalism.”
Musk also joked about Twitter’s lack of a PR department. “The right thing for PR departments is propaganda,” he said, musing, “I think maybe we need a VP of propoganda, it would be more honest. Also a VP of witchcraft.”
On Monday, Twitter experienced a widespread technical problem that produced an error if users tried to click on links to third-party websites. Musk addressed the glitch briefly: “What was supposed to be a small change to 1% of the Twitter user base ended up being a catastrophic change to 100% of the Twitter user base.”
During the Morgan Stanley talk, Musk also spoke about developments at electric vehicle maker Tesla and SpaceX, both of which he leads as CEO, and reiterated his belief that humans could one day colonize Mars. “We don’t want to be one of those lame, one-planet civilizations,” he said.
Separately, word emerged Tuesday that Endeavor, led by CEO Ari Emanuel, had made a small investment in Twitter in mid-January. The size of the investment wasn’t available but a source said it was not material to Endeavor’s business.