From the day of its listing on the stock exchange 2013 yearTwitter was just profitable Sporadically. Does its acquisition by Elon Musk offer a more positive financial perspective on the social network?

In mid-April, the billionaire said in an interview at the Ted2022 conference that his decision to buy the company was not financially motivated. “This is not a way to earn money” Tesla was number one. “I just have a strong intuition that I have a platform public ი Opening “For most people, it’s very important to the future of our civilization,” he said.

On the New York Stock Exchange for less than 9 years; Twitter had annual losses, except for 2018 and 2019When the group made more than $ 1,000 million in profits.

Bought by Musk for $ 44 billion. Is a small company compared to Facebook, With a market capitalization of more than $ 500,000 million. Twitter’s revenue comes mainly from advertising, but the platform does not attract enough internet users to make significant revenue.

By the end of 2021, Twitter had 217 million users.Monetizable“, Ie subject to advertising on the platform, almost far away 2 billion Facebook users.

Twitter will publish first quarter results on Thursday. Wall Street forecasts earnings of three cents per share and a turnover of $ 1.2 billion.

Funding

While Elon Musk’s priority does not seem to be profitability, the richest man in the world is looking for At least do not waste moneyEspecially since part of the purchase will be financed with its own funds.

In a document submitted to the stock exchange authorities last week, the businessman said he had $ 46.5 billion: $ 21 billion in his personal assets and the rest of the loans from Morgan Stanley Bank and a banking group comprising Société Générale and BNP Paribas.

Musk did not elaborate on how he intends to increase Twitter turnover, In addition to the tweet in which it offers a price reduction for the paid version of the network, Twitter Blue, is currently priced at $ 2.99 per month; Assign a certified account to paying subscribers and prevent advertising for these users. He later deleted this message.

Another way would be to reduce the number of Twitter employees, which could contribute to his desire to ease content moderation across the platform.

By the end of 2021, the California group had 7500 employees worldwide. According to a study by the Business School of New York University, Twitter was hired in 2020 About 1500 moderators.

It can also increase customer growth and advertising revenue, or add new paid features to the platform.

“He has his own plan in mind,” said Angelo Zino, a CFRA analyst. “If you can implement the model with subscription offers, while maintaining free options, it can work,” he added.

Debt

Financing a significant part of the purchase with loans, Musk will increase Twitter’s debt level.

Financial rating agency S&P It was announced on Monday It can reduce the credit rating of a social network, which is currently on BB +, by a few steps and put it in a negative perspective.

The main question for Zino is not so much Twitter’s debt, but how Musk’s personal contribution will be made.

The millionaire could relate to other investors so that not only his property would compromise.

“If he manages to involve other dazzling souls in the company, ‘it will probably increase his chances of success,'” Zino concluded.

(Reported by AFP / Daniel Hoffman)

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