12/27/2023 0 Comments Earth io stock![]() Mike Proulx, a research director at the analysis firm Forrester, said after the latest Musk outburst that the billionaire was X’s biggest problem. These include: a botched change to user certification that led to a spate of impersonator accounts the firing of key staff the reinstatement of users such as the misogynistic influencer Andrew Tate the approach to moderating hate speech on the platform and, most recently, Musk’s endorsement of an antisemitic statement on X.įrustrations over advertiser boycotts – the latest brands to pause spending include Apple, Disney and IBM after his recent post – have led to X suing two campaign groups, Media Matters and the Center for Countering Digital Hate, and to Musk’s message to reticent ad clients on Wednesday: “If someone’s going to try to blackmail me with advertising, blackmail me with money, go fuck yourself.” That flow of advertising revenue was hit as soon as Musk completed the turnover and he has consistently made management decisions, or published posts on X, that have given advertisers reason to continue withholding funds. Advertising is crucial to the site’s business model – for all Musk’s comments about changing it radically into an “everything app” – and accounted for nearly 90% of revenue under previous ownership. X is loaded with debt and the advertising revenue needed to pay for it has crashed. Linda Yaccarino, X’s chief executive, reportedly told lenders last month the company was cashflow positive apart from the debt servicing costs, which is a hefty caveat. Musk posted on X in July that “we’re still negative cashflow” – what he added next represented the crux of the platform’s financial dilemma: “Due to ~50% drop in advertising revenue plus heavy debt load”. Nothing appears to have changed on that front. In the company’s last annual results as a listed business, Twitter had negative free cashflow – spending more cash to run the business than it took in – of $370.4m in 2021. This gave extra edge to Musk’s comments in November last year, having laid off half the staff, that “bankruptcy isn’t out of the question”.Ī rough proxy for X’s ability to serve its debt is its cashflow and, again delving into its financial history, the record is not good. The next payment is due at the end of January. The deal was part-funded by $13bn (£10.3bn) of debt, which now sits on X’s balance sheet and requires quarterly payments of $300m. However, it was not heavily indebted and the acquisition changed that.
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