Elon Musk bought Twitter in October 2022, after several months of back and forth, for $44 billion. Today the company is only worth $15 billion, according to a report from investment firm Fidelity.
Only six months passed and Twitter’s value dropped 33%.
It’s not a surprise. Musk himself had already advanced the situation in several interventions in recent months. He acknowledged that he “overpaid for Twitter” when he bought it in October; last March he declared that the company was already worth “less than half”.
Which were South African’s mistakes What caused the collapse?
The company’s debts
Come on, this wasn’t caused by Elon Musk, but he decided Invest in Twitter.
The tycoon bought the company in October 2022: already in November he admitted that “Bankruptcy was a possibility if it didn’t start generating more cash.”
Musk noted that he took the company with a debt of almost 13 billion dollars, which from that moment passed into the hands of seven Wall Street banks.
Layoffs came, not only from executives, but also almost half of the workforce. But, as the months went by, the scenario did not become clearer, rather it became more complicated.
The changes in the Twitter platform since Elon Musk arrived
From now on, It’s all because of Elon Musk. His decisions not only affected Twitter administratively, but also its platform.
It opened the doors to users who they had been penalized for their violent speech, it eliminated the verification badges that certified the authenticity of certain people and allowed that, with a payment of 8 dollars a month, anyone could have the verified.
also removed any restrictions on information considered false about COVID-19 and other sensitive topics.
This led to the next point.
Distrust of advertisers
The chaos generated by the changes in the platform led many advertisers to withdraw. They did not want to be associated with a company that allowed violent speech and the ability for anyone to impersonate them with a purchased verification badge.
Sensor Tower notes that several companies, like Mondelez International, Unilever and Coca-Cola, which were in the top 10 Twitter advertisers before Musk took over, don’t even make the top 50 today.
investment is less due to distrust of Musk’s changes.
Insider Intelligence It said in April that Twitter would drop 28% from 2022 ad revenue, which was then $4.14 billion.
Users do not respond to Twitter Blue
Elon Musk thought that selling verification badges through Twitter Blue It would help him generate liquidity in the company. That the hundreds of millions of users would want to have it at any cost.
And not, it hasn’t been like that.
According to Time, less than 1% of Twitter users had signed up for Twitter Blue by the end of March. There is no interest in having the “Blue check”, apart from the benefits it generates (longer videos, more space for text).
Elon Musk’s unstable behavior
It seems like a very personal issue, but Elon Musk’s conduct It is not the most appropriate for a head of companies, especially in the United States.
The First Post portal explains it very well: “His controversial tweets, including those that linked to conspiracy theories or delved into debates about racism, They have also given advertisers food for thought.”
From there, Musk decided to put Linda Yaccarino, a well-known face among advertisers, in the CEO chair. However, Musk’s way of being, unpredictable, unstable and overwhelming, will not change: it could continue to affect your business.