Twitter Has a New Boss
Source：New York Times
From：Taiwan Trade Center, Chicago
Update Time：2022/12/08
The long-talked-about acquisition of Twitter was finalized in late October. Elon Musk paid $44 Billion for the social media site. Soon after the takeover Musk began making changes. He immediately fired Twitter’s chief executive and other top managers. He has continued with layoffs throughout the company. Roughly half of Twitters employees are expected to lose their jobs. However, staffing is not the only major change Musk hopes to make within the platform.
Musk’s purchase was the largest leveraged buyout of a technology company in history. He now faces financial challenges.
Twitter which hasn’t turned a profit in 10 years, has incurred $13 billion in debt from the takeover deal.
“Technology companies should be left with enough flexibility to pay for new research and development and new levels of innovation,” said Drew Pascarella, a sector lecturer of finance at Cornell University who previously worked as a banker advisor on acquisitions. This buyout “completely eliminates flexibility.”
Apart from cost cutting, musk is seeking more investment for the slow-growth company. However, investment for a company like Twitter is tricky. Unlike real estate companies, Twitter does not have collateral to offer lenders, instead what they care most about is getting paid their interest, on time.
Regardless, it is clear the company needs a cash infusion to build its spending flexibility. In addition to seeking more investment, Musk has introduced paid subscriptions for those social media subscribers who wish to “verify” their accounts. This was the feature of the app that was previously free, meant to verify business and celebrity accounts as authentic. Whether paid subscription services within the app will successfully raise the funds' Musk is seeking, is yet to be seen.
“There’s a massive negative cash flow, and bankruptcy is not out of the question,” he said, according to a recording heard by The New York Times.
Mr. Musk added that they would need to work strenuously to keep the company afloat. “Those who are able to go hardcore and play to win, Twitter is a good place,” he said. “And those who are not, totally understand, but then Twitter is not for you.”
Source: https://www.nytimes.com/2022/11/11/technology/elon-musk-twitter-takeover.html