I'd usually suspect mass layoffs following such losses, but the Twitterati seem to be ahead of that curve with resignations.
"You can't fire me if I quit!"
Twitter's new CEO Linda Yaccarino is reportedly starting work at the bird site today, weeks earlier than expected, in the wake of a wave of leadership resignations and the same day it was reported that Twitter's ad revenue is well and truly in trouble. It was believed Yaccarino would begin closer to the start of July based on …
OK 59% is bad, catastrophic for any other organisation. But with the salary bill down around 75% and datacentre by 30% plus consquent slimming of other costs - the operating deficeit might be manageable if it wasn't also required to finance the debt loaded on the company. That's Elon's greatest contribution to the company balance sheet. Will the creditors stand by him?
Fidelity's investment in X/Twitter is smallscale compared to SpaceX & Tesla. I guess they just see it as a sweetener to secure their cut of NASA's budget. As for Saudi Arabia - again small change for a grip on America's right.
Interest payments are almost three times Twitter V1 revenue. Firing all the staff and not paying any bills would not be sufficient to make a profit with the old business model. The obvious way forward would be to expand the user base for his real skill set.
His bold mission statement was that he would grow the platform and its revenue.
A 59% loss in advertising suggests he has completely failed to do the former. The draconian cost cutting can only be viewed as a successful move it if doesn't have long term impact on the functioning of the company. So far various features have failed or been removed, the site suffers from reliability problems, and we've not seen any of the "rapid innovation" Musk told us he could deliver with his highly motivated teams and skilled management.
So even the cost cutting can hardly be regarded as a success.
What the investors think is anyone's guess. They might want to prompt an ownership change sooner, before what remaining value is further eroded.
His current antics fighting the gender wars suggest that Musk is completely incapable of avoiding offense, and the slow decline of the rest of the platform suggest he's not the great tech leader we were promised. Given that all of the other companies he purchased came with highly skilled senior management who delivered the actual innovation, this should perhaps not come as a surprise.
What meat is there? Does Twitter have an R&D department? Does it control lots of IP/Patents? Genuine question. Not sure ex ad revenue can be liquidated. Maybe it was that tat that the chief twat was flogging on ebay...ebay signs and merch and such...might be a lean corpse for the creditors to fight over.
Don't forget he's quit paying rent not just on HQ but seemingly across everywhere Twitter occupies so that's a "savings" too. The numbers may look decent on their financial statements but they can't keep stiffing people indefinitely. At some point the landlords will sue, and a lease is a contract so it will be open and shut for a judge to order payment with bankruptcy as the only way to avoid payment at that point.
It's a delicate balancing act: if a company is forced into bankruptcy then all the creditors line up for a cut of what remains. That, in itself, would be an expensive and time consuming process with little prospect of getting more than a few Cents in the Dollar back. For that reason it's sometimes better to aim for a settlement figure rather than go down the nuclear route.
That point was in the past. Litigation moves as fast as a snail but this time there is an extra fun twist. Normally the limit would be Twitter's funds and assets. In theory it is possible to pierce the corporate veil and go after the shareholders' wealth directly. In real life this never happens because the share holders with a controlling interest take care to run the company as a separate entity and not as an extension of their ego. It would take astonishing levels of incompetence and madness to create evidence strong enough to allow piercing the corporate veil...
You're accounting is wrong: 75% less workforce doesn't mean 75% lower wage bill. Even though there definitely was plenty of dead wood (lots of do gooders on nice sinecures), how much you save depends very much who was fired and on what terms. Then there's the settlments (after court action). The charges alone for this will weigh on the books for a couple of years.
So, what's really needed is a debt restructuring or write-down couple with a strategy for effective growth. Not that Musk needs the toy to make any money but he does need to get rid of the debt that he personally guarantees.
Won't happen because Musk is incapable of charm. He is however very good at being offensive.
Good luck to any new executive that dares to tell him the truth - that the only way the advertisers are coming back is if he shuts his arrogant mouth.
that the only way the advertisers are coming back is if he shuts his arrogant mouth
I think it is too late for that. They will never be back, the only thing shutting his mouth might do is prevent more from leaving. The only way they can get advertisers back is if Musk is gone. Not gone as CEO but gone from any ownership stake and the algorithm fixed so everyone isn't forced to see all his tweets.
As I wrote when her appointment was first announced, I think it makes sense for someone who's interested in building their own reputation and doesn't really care about anything beyond that. She's being "gutsy" by taking on a company that everyone knows is in dire straits, under the leadership of someone who's clearly difficult to work with. Because Twitter is widely seen as doomed, either she succeeds against great odds and is brilliant, or she fails but it's not her fault – and along the way she gets to show off making "tough choices" (tough for other people, that is).
Executives who leave failing companies rarely seem to be held accountable for those failures. Indeed, high-profile failures appear to help their careers. It's good work if you can get it.
..."Clawing that capital back is going to require a charm offensive Twitter's leadership (prior to today) seemed incapable of."
Really? Whatever happened to Melon Mush's very loud and very bravado-laced threat when Microsoft dropped its advertising with the TwitHead--"LAWSUIT TIME!!"
Seemed awfully charming at the time; almost meek and mild from someone with Mush's reputation as the consummate show-boater and grand-stander. He's trying for "consummate intimidate-er".
Regarding the title--I can't count how many times I've seen, over the years, an unsuspecting schmuck beeing conned into taking a high-powered, high-sounding job strictly for the purpose of being blamed for the ineptitude of the previous shithead. And the ineptitude of the shithead, in this case, is so monumental, Yaccarino's reasons for being (eventually) fired should include "stupidity". No, make that "idiocy".
But, there's no explaining "Look at ME! I get to work for MELON MUSH!!!
Nah. At this level, the salary generally isn't important.
What you get, mostly, is connections. Sure, there are the benefits, and there are the stock options (though in Twitter's case those will probably soon be worthless except to collectors of ephemera). What you want are the lucrative, minimal-effort speaking honoraria and short-term consultation gigs and maybe the management-book deal (those things get pumped out by the zillions), and most of all the board appointments. Getting five or six figures for four meetings a year is a pretty good deal, and once you make those connections you can be appointed to half a dozen of the things.