Twitter, Tesla and SpaceX may one day define the true stature of Elon Musk as a business daredevil, innovator and pioneer. But today, mostly dark clouds hover over the eccentric billionaire.
The remarkable recent entry of Meta’s Threads, which in a span of days attracted over 100 million subscribers, only piled more woes on Elon Musk’s Twitter, Thread’s main rival.
Musk tweeted last weekend that Twitter was “still cash flow negative”, or in other words spending more than it was cashing in.
Despite earlier claims that advertisers were coming back to Twitter, Musk admitted in his latest tweet that ad revenues were down roughly 50% which if compared to Twitter’s 2021 figures, ad revenues are around $2.25 billion today. Musk also complained of a “heavy debt load” of $13 billion, which was used to fund the Twitter takeover at his original offer price of $54.20 a share and at a total cost of roughly $44 billion, in October 2022.
Each year, Musk must pay at least $1.4 bn in interest fees on the debt he took on to buy the company. Musk’s efforts to generate subscription revenue through Twitter Blue, an $8-per-month subscription service, failed to offset ad revenue loss. Musk did cut costs by reducing Twitter’s workforce by 80% but a new lawsuit claims Twitter still owes ex-workers some $500 million in severance pay.
Last month, Linda Yaccarino, a former advertising executive at NBCUniversal, took over from Musk as the new CEO and was tasked to bring back advertisers.
Tesla: Wakeup call
EV maker Tesla is releasing its Q2 results tomorrow July 19, 2023, and investors are left agitated. The company is facing mounting pressures from competition in China and reports suggest CEO Elon Musk is distracted, mostly by Twitter, and not focused on Tesla’s predicament.
Around two-thirds of respondents to a Bloomberg survey said Musk needed to pay more attention to his EV company.
Musk’s attention has been also directed at his latest AI venture, xAI, tasked with “the overarching purpose of just trying to understand the universe,” Musk said in a Friday Twitter Spaces chat.
While the distractions are plausible, Tesla is active and did finally produce a Cybertruck, the cost and functionality of which are still unknown.
Elon Musk’s Space Exploration Technologies, or SpaceX, told investors it expects to generate nearly $8 billion in revenue in 2023, or about double its 2022 revenues. In anticipation of rapid growth, many investors have shown a great appetite for SpaceX shares.
Last week, CNBC reported that SpaceX reached a valuation of about $150 bn following an announcement that the company entered into an agreement with new and existing investors to sell up to $750 million in stock at a price of $81 per share.
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