Twitter has a long road ahead that some argue could end with a bankruptcy filing.
Key Details
- Twitter has been losing money quickly and unless something can be done, Elon Musk says it could potentially end with a bankruptcy filing.
- Musk has attempted to reverse Twitter’s falling revenue by adding subscription services and attempting to gain back lost advertisers, but hasn’t been very successful in his endeavors.
- Twitter has a long road ahead as Musk continues to save the company from falling under, but unless something is done the outlook for Twitter isn’t looking great.
- Still, many believe that with time, Musk can make the social-media giant successful.
Why it’s news
Twitter has had a rough few weeks after Musk purchased the company—firings, layoffs, walkout, demands, and lawsuits.
Twitter has not had an annual profit since 2019. The company’s net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year, according to Wall Street Journal writer Mark Maurer.
Twitter is continuing to be hit with a loss in revenue. Musk says Twitter is losing around $4 million daily and if something isn’t done he might have to file the company for bankruptcy.
Around 90% of Twitter’s revenue has always been from advertising, but since the company was in a tangle with Musk and the previous head of the company many advertisers pulled out causing a major loss for the company.
The advertisers say they were unsure of the future of Twitter and decided to put their advertising money elsewhere. Until advertisers are comfortable with Musk’s takeover and see that Twitter users remain on the platform they will most likely refrain from putting money back into Twitter which could take months.
Twitter is in a load of debt and Musk is attempting to fix that, but if his plans remain unsuccessful the company could potentially file for bankruptcy in the future.
Musk’s plans
In an effort to bring more money back into the company and cut other costs Musk decided to lean into paid subscriptions.
He launched a subscription service where Twitter users could pay to receive the verified blue check mark, but the plan backfired.
The new subscription did not turn out to be what Musk was hoping for, resulting in him putting a pause to the subscription and planning to relaunch it on November 29.
He also attempted to cut costs by slashing the workforce in half. Quickly after his acquisition he fired everyone from the Twitter board and cut around 3,700 employees from the company.
