Elon Muskwho acquired Twitter in a debt-laden $44 billion deal just over four months ago, said advertising revenue had fallen 50% since he took office.
But the mega-billionaire tech mogul said a few big advertisers have continued to spend with Twitter, and he specifically called out — and thanked — Disney and Apple as remaining two of the social network’s biggest marketers. speaking Tuesday at the 2023 Morgan Stanley Technology, Media and Telecommunications Conference in San Francisco.
According to Musk, Twitter is improving its ability to deliver timely and relevant ads. He said he recently spoke with David Zaslav, CEO of Warner Bros. Discovery, who asked Musk why Twitter couldn’t put an ad with the trailer for HBO’s hit show “The White Lotus” next to every tweet mentioning “White Lotus.” Musk replied in the affirmative, describing it as basic keyword-based ad buys that Twitter now sells: “It’s just Google AdWords, but applied to tweets.”
Musk painted a dire picture of Twitter’s finances. He said that with declining ad revenue and additional debt payments Twitter has to make (of the roughly $12.5 billion in debt Musk needed to complete the deal), the company was on the verge of go bankrupt in four months. The situation required “immediate and drastic action,” Musk said.
In addition to cutting Twitter’s workforce by more than 70%, from 7,500 to less than 2,000, the company consolidated into two data centers (instead of three) to reduce cloud-related expenses. In total, Twitter reduced its annualized consumption rate (excluding $1.5 billion in debt payments) to approximately $1.5 billion from $4.5 billion previously, while executing “the evolution of fastest product in Twitter history,” Musk said.
“There were a few bumps in the road, but that’s to be expected,” Musk said. “Now we have the opportunity to grow [Twitter] into something spectacular. He added: “I don’t mean to jinx it or anything, but I think we have a chance to be cash flow positive in the second quarter.”
Musk said Twitter has plenty of room to improve how it monetizes time spent on the platform. Every day, Twitter generates 130 million hours of attention from “the smartest people on the planet”, he claimed; currently, however, the company earns only 5 to 6 cents in 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, “as nasty as that may be.” A self-proclaimed ‘free speech absolutist’ – who has reinstated the accounts of many Twitter accounts previously banned for violating his policies, including Donald Trump’s – Musk reiterated that he sees Twitter as an important vehicle to ensure freedom of speech. “If we don’t have a solid 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 a “forum for citizen journalism.
Musk also joked about the lack of a PR department on Twitter. “The good thing for PR departments is propaganda,” he said thoughtfully, “I think maybe we need a vice president of propaganda, that would be more honest. Also Vice President of Witchcraft.
Monday, Twitter had a widespread technical issue that produced an error if users tried to click on links to third-party websites. Musk briefly addressed the issue: “What was supposed to be a small 1% change in Twitter’s user base turned out to be a catastrophic 100% change in Twitter’s user base.”
At the Morgan Stanley conference, Musk also spoke about developments at electric vehicle maker Tesla and SpaceX, both of which he leads as CEOs, and reiterated his belief that humans could one day colonize Mars.
Separately, word emerged on Tuesday that Endeavour, led by CEO Ari Emanuel, had made a small investment in Twitter in mid-January. The size of the investment was not available, but a source said it was not material to Endeavor’s business.