Help: Elon Musk’s Dream Of Free Speech On Twitter In Trouble

By Tony Ademiluyi

World’s second wealthiest man Elon Musk was and is still a very active user of Twitter. When he conducted an opinion poll asking whether he should buy shares there so as to ensure that free speech is better guaranteed, his millions of followers totally agreed with him and he went ahead to become its largest individual shareholder at the time. Later, he upped the ante by acquiring it outrightly for a princely sum of $44 billion.

He financed the expensive acquisition with $30 billion of his personal funds and the rest was sourced from the market. However, facts have now emerged that the acquisition was overpriced with the lucky former Twitter team led by Jack Dorsey and their avalanche of shareholders who obviously preyed on his bid for users to enjoy the wonderful gift of free speech laughing to the bank.

My account there was suspended for no reason, so I realize the great importance of free speech as one of the best gifts man can enjoy while on this planet. For this gift, blood was shed with the blood of the martyrs being the fruits of today’s bread.

Conservative Treehouse reported the current advertising revenue for the social media platform Twitter. Ignoring the nonsense narrative engineering and just focusing on the data itself, the revenue side for Twitter is half what we previously estimated. This makes the overlay for decisions on platform content even more stark.

According to the data, ad revenue for the month of April was a lacklustre $88 million. That’s a pace of just over $1 billion a year. With a pre-Musk operating expense of $4.5 billion, and pre-Musk revenue at $4 billion cited by the Twitter owner as the backdrop, here’s the outlook.

Assuming post-Musk labor cost reductions saved $500 million, a decline in revenue to $1 billion/yr would be a $3.0 billion deficit; to wit, you would need to add the $1.5 billion in debt service as part of the investor buyout structure.

That puts Twitter into a $4.5 billion loss ballpark per year.

This is the high end of what Musk previously estimated in publicstatements. Now we see why. From the Times:

Twitter’s U.S. advertising revenue for the five weeks from April 1 to the first week of May was $88 million, down 59 percent from a year earlier, according to an internal presentation obtained by The New York Times.

$1 billion per year in advertising revenue is a whopping 75 percent loss from the claimed $4 billion in revenue before the Musk purchase. Perhaps the Fidelity estimate of company value at $15 billion is closer to reality.

If the value of Twitter has dropped to the $15 billion level, that means almost all of the $30 billion in personal equity Musk put into the company has been lost.

Current investor debt is $12.5 billion, with $1.5 billion in debt service/yr. A valuation of $15 billion would only leave Musk with around $2.5 billion in equity position. If the valuation is accurate, Musk personally would have lost around $27.5 billion in this Twitter platform purchase.

The last time I outlined the Twitter financial position, several people took exception to the data as shared. However, the data is from Musk himself, and I will again post the video at the bottom of the article.

Revenue is now Musk’s number one priority. All other platform decisions are going through the prism of financial viability.

The Twitter CEO has provided some convincing commentary about his willingness to forgo revenue in order to retain “free speech.” However, more recently he has qualified that outlook by saying, “Freedom of speech is not the same as freedom of reach.” Musk has noted Twitter will block, remove, censor, shadow ban, de-boost, downrank, and stop content from amplifying based on the determination of those in charge of Twitter content.

This controlled “freedom of reach” perspective, which is really shadow-banning in practice, is generally accepted and now admitted. Against this backdrop, it becomes important to understand the priorities of the platform to understand the guidelines of the platform. Within this context the financials are key to understanding what elements are included within “approved content.”

Twitter is now a private company, therefore understanding the financials of Twitter is a little more challenging than when they were required to post their financial statements publicly. However, Musk gave an interview with the Babylon Bee on June 3 and revealed some of the internal financial challenges.

I am going to summarize the status of the Twitter financial position according to what Musk himself revealed.

· Twitter was initially purchased by Musk and his investors for around $44 billion. The company now estimates its value around $20 billion. Last week, the mutual funds giant Fidelity, which owns shares in Twitter, valued the company at $15 billion. Bottom line, Musk grossly overpaid.

· Musk put roughly $30 billion of his own net worth into the purchase and financed the rest.

· Current outstanding debt on the financing for the purchase is around $12.5 billion, per Musk statement.

· Current debt service – interest on the loans (from investors) – is roughly $1.5 billion/yr. $120.5 million per month for debt service, per Musk statement.

· Previous revenue (when public) was roughly $4 billion/yr. Twitter was generally breaking even.

· Advertising revenue, as a result of changes in industry in combination with concerns about Twitter, are “half” what they were during the acquisition phase, per Musk statement. That puts current advertising revenue around $1 billion/yr, according to the Times.

· Per conversation, current status of Twitter is -$3 billion/yr and could be as high as -$4 to 5 billion/yr.

· The Times revenue leak now makes the top side of this scale make sense, if $4 billion in revenue was generally the breakeven point (before acquisition), and now they have$1 billion in revenue and $1.5 billion in additional debt service [as they trim operational costs (including labor) to offset].

· For the bottom line to be an operational loss of $3 to $5 billion (estimated) per year, Twitter is generally losing around $300 million per month.

· There is only so much Tesla stock Musk can sell to support Twitter. He has limits (per conversation.)

· Twitter has around $1 billion in liquid cash available (Per conversation), with a burn rate of $300+ million a month.

Twitter is in locked contracts with AWS and Google cloud services through 2025 at roughly $300 million per year for both <[a href="" target="_blank">AWS – $100 million, Google – $200million].

Twitter Blue subscriptions are around 180,000 users, paying $11/mo. That’s around $2 million a month; pittance in comparison to what he needs.

No wonder the liberals some of whom resigned in exasperation were probably trying to emotionally blackmail Musk to toe their destructive path so as to attract advertising revenue. Their botched attempt to block the viewership of Matt Walsh’s documentary is a clear pointer to the reality of them wanting Musk to one day file for bankruptcy so that Conservatives can be permanently silenced on that platform.

Musk should rethink his business model; I suggest adding some elements of e-commerce and making Twitter a hub for conservatives globally to buy and sell goods and services. This will serve the twin purpose of adding much more revenue to the platform’s coffers and also financially empowering conservatives as money is usually the challenge for them.

We must continue to tinker with ways to financially save Twitter; conservatives must collectively own it so that the wonderful blue app does not die.

Tony Ademiluyi is the Director, Media & Publicity West Africa for West African Christian Voice Triumphant Ministry Nigeria and is a contributing writer for the Project for Human Development. He can be reached at +2348167677075.

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