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Why Elon Musk Is Rushing to Make Changes to Twitter
Posted
November 9, 2022
Views
9,158
Likes
199
Comments
29
Engagement
2.49%
November 9, 2022
9,158
199
29
2.49%
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0:56Now PlayingElon Musk took control of Twitter and it feels like every day there are new updates he's rolling out on the social media platform. The world’s richest man has been reviewing the company’s code with help from Tesla Inc. engineers, while consulting with powerful friends he trusts to help him make important decisions about where to take the product.
Elon Musk has wasted no time in transforming Twitter Inc. since buying the company for $44 billion on Oct. 27. He’s fired most of the senior executive team, including the chief executive officer and the chief financial officer; fired about half the staff over email; has told people at the company he’ll repeal its work-from-anywhere policy, forcing employees back to the office after years of remote work; and proposed changes to try to pull in significantly more revenue from the company’s fledgling subscription service.
There’s a reason for the urgency: Twitter has big new bills to pay. The deal was a leveraged buyout, with Musk using borrowed money that goes on Twitter’s balance sheet. Twitter’s debt load has jumped to about $13 billion, up from a pre-deal situation where it owed $1.7 billion on junk bonds, along with other types of debt that could be converted into stock. The effect of this shift is that Twitter will have annual interest payments approaching $1.2 billion, up from below $100 million in the pre-Musk era. The situation could get even more expensive for Twitter, because the interest rates on about half of that debt aren’t locked in and will rise with the market. The company hasn’t been profitable for a full calendar year since 2019, and things weren’t looking better this year. Twitter posted a net loss of $270 million in the second quarter and was projected to lose more than $200 million in the third quarter. (The deal closed before earnings were reported.)
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