Elon Musk said Twitter is like a crashing plane with its 'engines on fire' in a discussion of the platform's financial issues
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- Elon Musk said Twitter is like "a plane headed towards the ground" in a Twitter Space on Tuesday.
- He explained that he had cut costs because Twitter had a predicted negative cash flow of $3 billion next year.
- Musk has slashed staff numbers by nearly two-thirds since buying Twitter in October.
Elon Musk compared Twitter to a plane crash, as he explained his rationale for cutting costs at the company by enacting mass layoffs in the weeks after he bought it.
"This company is like you're in a plane that's headed towards the ground at high speed, with the engines on fire, and the controls don't work," Musk said in a Twitter Space late Tuesday evening.
The Financial Times first reported on the comments. Insider has listened to Musk's appearance on the Twitter Space, which was titled "Scale, Complexity, and number of engineers," and hosted by developer George Hotz
During the chat, Musk acknowledged that his actions "might seem sometimes spurious or odd, or whatever."
"It's because we have an emergency fire drill on our hands," he added. "Not because I'm like naturally capricious."
The Twitter CEO — who is currently searching for his own replacement — said that before his cost-cutting measures, the company was on track for a negative cash flow of around $3 billion next year.
The company, Musk said, is set to make around $3 billion in revenue in 2023, with net cash outflows of around $6.5 billion. In Twitter's 2021 annual report, the company reported revenue of around $5 billion, with total costs of roughly $5.6 billion, and a net loss of $221,000.
Twitter's financial situation is also impacted, Musk said, by the $12.5 billion of debt the company took on as part of Musk's purchase. That debt has annual servicing costs of around $1.5 billion, Musk said. These costs have increased because interest rates are "going crazy," he added.
Thanks to layoffs and building subscriber revenue through Twitter Blue, Musk now believes the company will break even on cash flow next year. He added that the company would be "dead" if he hadn't made changes.
Staff numbers have fallen from 7,000 to roughly 2,300 since Musk took over, per Insider's Kali Hays. The New York Times also reported that Twitter has stopped paying rent on its offices, and has refused to pay $200,000 in costs for private jet flights.
During the Twitter Space, Musk also spoke about his meetings with advertisers, explaining that they asked "hard questions" about their return on investment because of the declining macroeconomic situation.
"When you do not have a clear answer, then advertisers don't want to advertise because they're being sane," he added.
Twitter users voted for Musk to step down as CEO, in a poll posted hours after he was photographed with the CEO of the Qatar Investment Authority, which has a $375 million stake in the company.
Twitter did not immediately respond to Insider's request for comment.
Contributer : Business Insider https://ift.tt/5ZIH60u
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