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Elon Musk expects Twitter to hit cash flow break even next year

Credit: @BigImpactHumans/Twitter

During a Twitter Spaces session hosted by noted hacker George Hotz, Tesla CEO Elon Musk shared some details about the social media company’s financials. These include Twitter’s previous trajectory, as well as when he expects the company to become cash flow break even.

Musk stayed in the Twitter Spaces session for roughly an hour, and he addressed a number of questions. Hotz, the host of the Twitter Spaces session, noted that not many CEOs, if any, actually participate in such sessions. That being said, Musk did not waste time, as he provided a number of notable details about Twitter.

Musk noted that Twitter was tracking to spend about $5 billion next year. Because of debt on transaction, $1.5 billion in debt servicing was required. Twitter’s revenue was also tracking to $3 billion. “So that’s like a negative cash flow situation of -$3bn next year. Not good,” Musk said. 

This, according to Musk, was why he spent the last five weeks “cutting costs like crazy.” “This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work,” the Tesla CEO said. 

Musk was not exaggerating about this. Since his takeover, he has cut Twitter’s workforce by a notable degree, among other cost-cutting measures. But thanks to these efforts, Musk noted that he now expects Twitter to roughly hit the cash flow break even point next year. 

“I now think that Twitter will, in fact, be okay next year,” Musk said, though he admitted that accomplishing such a feat “will be difficult.” 

Apart from his comments about Twitter’s financials, Musk also admitted to some of his errors as of late. These include the suspension of Paul Graham, a respected venture capitalist who has been supportive of Musk. “Yeah, that was a mistake,” Musk said, noting that Graham could post about rival social media platform Mastodon as much as he wanted. 

Elon Musk completed his acquisition of Twitter in October for $44 billion, partly funding the purchase through the use of nearly $13 billion in debt. The interest on this debt will result in annual repayments of approximately $1.5 billion, as noted by Bloomberg News. Musk has since laid off over half of Twitter’s staff, and he has announced that he is open to stepping down as CEO once a suitable replacement is identified.

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Elon Musk expects Twitter to hit cash flow break even next year
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