• By The Financial District

Musk's Twitter Saddled By Debt, Losses And Huge Costs

Elon Musk says his $44 billion Twitter takeover might result in a bankruptcy filing. But there could be other options, wrote Mark Maurer for the CFO Journal of The Wall Street Journal.


Photo Insert: Twitter was stagnating. It hasn’t booked an annual profit since 2019 and posted losses in eight years of the past decade. Its net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year.



To make the deal work, Musk has been trying to add subscription revenue and reassure advertisers about the platform’s future. Twitter was losing money before he bought the company, and the deal added a debt burden that requires more cash.


Twitter was stagnating. It hasn’t booked an annual profit since 2019 and posted losses in eight years of the past decade. Its net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year.



Twitter has struggled to attract new users and increase revenue, which came in at about $5.1 billion last year. In its last quarterly filing as a public company, for the period ended June 30, revenue was $1.18 billion, down slightly year-over-year.


Nearly 90% of its revenue last year came from ads, traditionally the company’s main source of revenue. In 2021, Twitter took in $4.51 billion from advertisers and $572 million from licensing data and other services.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

The company had more than $2 billion in cash and less than $600 million in net debt before the takeover talks—very little debt for a company in the S&P 500 index. But that cash position was down 35% from a year earlier as of June 30, filings show, and Mr. Musk paid for Twitter by taking on $13 billion in debt.


He paid for the rest in equity, some contributed by multiple investors. With advertisers leaving Twitter under Musk along with millions of users, Musk has to pump in more money to the business and convince the global market that he can make Twitter profitable, which is a hard sell now and in the future.



WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic



Optimize asset flow management and real-time inventory visibility with RFID tracking devices and custom cloud solutions.
Sweetmat disinfection mat