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Elon Musk Reveals Twitter's Path to Financial Stability: Approaching Breakeven After Near Bankruptcy

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Lauren Miller

June 20, 2024 - 19:00 pm

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Elon Musk's Struggle and Twitter's Road to Recovery: A Comprehensive Look

Elon Musk tweeted Sunday that the last few months have been “extremely tough,” but said that Twitter is “now trending to breakeven.” Musk, who is also CEO of Tesla and SpaceX, said in a tweet that he had to “save Twitter from bankruptcy” while also fulfilling his roles at his other companies. Since acquiring the company for $44 billion late last year, Musk has carried out a rocky takeover of the social media platform.

The Challenges Musk Faced at Twitter

Twitter CEO Elon Musk said Sunday that the last few months have been “extremely tough,” but said the social media company is “now trending to breakeven.” CNBC was not able to independently verify this claim. Musk, who is also CEO of Tesla and SpaceX, said in a tweet that he has had to “save Twitter from bankruptcy” while also fulfilling his roles at his other companies. “Wouldn’t wish that pain on anyone,” he wrote. “Twitter still has challenges, but it is now trending to breakeven if we keep at it. Public support is much appreciated!” Twitter and Musk did not immediately respond to CNBC’s request for comment.

Rocky Takeover and Financial Struggles

Since acquiring the company for $44 billion late last year, it’s been a rocky takeover for “Mr. Tweet,” a nickname Musk recently embraced. According to tech newsletter Platformer, Twitter’s daily revenue was down 40% year-over-year in January 2023, and hundreds of Twitter’s top advertisers have halted or pulled back on spending. One firm estimated that Twitter’s ad revenue decline was as steep as 70% in December, year-over-year, Reuters reported. Some of the changes that Musk implemented at Twitter, like restoring the accounts of controversial figures including neo-Nazi website founder Andrew Anglin, resulted in brands’ departure from the platform, and an outcry from civil rights leaders.

Revenue Decline and Advertiser Exodus

Musk acknowledged in a November tweet that the company suffered a “massive drop in revenue” after advertisers paused spending on the social media platform. At the end of 2022, Musk claimed that Twitter was no longer “in the fast lane to bankruptcy,” but it still wasn’t “secure” during an episode of the All-In Podcast with long-time friends of his, who are also investors in Twitter, angel investor Jason Calacanis and Craft Ventures co-founder and partner David Sacks. Twitter has been sued for failure to pay various partners, vendors and former employees since Elon Musk took over. In one example, Florida-based Private Jet Services sued Twitter for failure to pay $197,725 for its transportation services. In another case, the landlord of Twitter’s San Francisco headquarters office sued the company after it allegedly failed to pay around $6.8 million in rent in December and January.

Legal and Operational Challenges

Under Musk’s management, Twitter has slashed headcount through mass layoffs, other terminations and internal changes that compelled many to resign, including the end of a work-from-home forever policy that was put in place under former CEO Jack Dorsey. Labor attorney Shannon Liss-Riordan has filed hundreds of demands for arbitration and a proposed class action lawsuit against Twitter on behalf of affected employees. According to a January tweet, she is arguing that former Twitter employees who were laid off or forced to resign are owed more severance than Musk’s team offered them. Besides cutting costs, the company has tried to drum up new lines of revenue or income. Twitter auctioned off everything from kitchen supplies to office equipment in January of this year.

Revenue-Generating Initiatives

The company also launched — and relaunched — an updated Twitter Blue subscription service in December, after Musk had pulled and delayed the service in November. Musk decided, more recently, to charge researchers for access to the company’s API and to do away with all free access to it. The centi-billionaire has faced significant shareholder backlash at Tesla for being distracted, for borrowing talent from Tesla to help him at Twitter, for stirring up political controversy at Twitter, and for selling billions of dollars worth of his Tesla shares to finance his Twitter takeover. In a tweet Sunday, one Twitter user expressed concern about how much Musk has had on his plate. “I’m worried about me too,” Musk wrote in response.

Future Prospects and Public Support

Elon Musk's recent statements highlight the ongoing challenges and efforts to stabilize Twitter's financial situation. Despite the significant hurdles, Musk's commitment to navigating these issues while balancing his responsibilities at Tesla and SpaceX underscores his determination. As Twitter trends toward breakeven, public support and understanding remain crucial. Musk's transparency about the company's struggles and his call for public backing reflect his strategic approach to securing Twitter's future. The road ahead may still be tough, but Musk's leadership aims to steer Twitter toward a more secure and sustainable position in the social media landscape.

Conclusion

Elon Musk's journey with Twitter has been marked by significant challenges, strategic shifts, and a determined push toward financial stability. His recent tweets shed light on the difficulties faced and the progress made, painting a picture of a company striving to overcome its past issues and forge a path to breakeven. Public support and a keen eye on revenue generation and cost-cutting measures are key components of this journey. As Twitter navigates this complex landscape under Musk's leadership, the focus remains on achieving a stable and prosperous future for the platform.