Twitter generated $5 billion revenue in 2021, a 35% increase on 2020 figures and a significant improvement on the 8% and 13% increase the two years before.
Cut backs were needed, as advertising revenue would have been significantly down this year, given the economic down turn. However, there was no need to gut the company to make it profitable.
Your graph doesn't really counter the parent's point. The profit line was trending upwards 2020 was their most profitable year. It certainly looks like the business was becoming sustainable.
The Twitter Buyout is structured as a $13 Billion loan.
That means that Elon Musk's Twitter Buyout costs $1.3 Billion/year _ON TOP_ of all the other costs of Twitter.
If Twitter was "barely profitable" in 2021, they're now $Billion+ short / year. That has nothing to do with "old Twitter" decisions, and 100% to do with how Elon Musk structured the buyout.
Presumably, you're supposed to assume that Musk knows what he's doing and that he has a plan to make $1.3 Billion in profits (to break even on the loan) and then go beyond (to make profit on his $44 Billion investment). But... I'm honestly not seeing it.
As far as I understand Amazon makes a deliberate choice to reinvest their profit into research, marketing, etc, with the promise that it will grow more in the future.
Musk has been very upfront that Twitter is bleeding money (hence why he is firing so many people), it's not simply that a healthy profit margin is being reinvested.
twitter lost copious amounts of money even with unprecedented revenue (from institutional ads one would assume, as it had never happened to that degree before or since, and private ads were cheap in 2021)
If Elon hadn't bough it, maybe the Twitter would have been fine without significant restructuring. But now Twitter has to service a significant part of the debt created to buy the company, and thus has to generate more revenue.
Elon bought Twitter because the Delaware courts are not the milquetoasts he's accustomed to (at the SEC).
Edit: my suspicion is that Elon expected the Twitter board to rebuff him, and he'd walk away calling them names for the rest of his days - and then the market dropped, removing resistance from the board (if any existed). This was capped off with Delaware courts showing every sign of muscular oversight of contract law, with Twitter reveling at the chance of embarrassing Musk and people in his orbit and getting bought off at a now-overpriced amount. It was a perfect storm.
I mean, you are both claiming cuts were needed and they’re too much. So how much was right? How do you know? You’d do a better job than the people who have access to the numbers? That’s a fairly arrogant position
Gee, it's almost like there are aspects of life where a single-minded absolutist position is going to be less effective than getting to know the actual situation and making an informed decision based on human judgement.
Most FAANGS have been cutting by 10 to 15%. That trims excess fat without gutting a company.
Twitter seems to have a serious cultural problem at the moment, and that is generally a lot harder to fix than to rehire when the growth curve inverses.
I am sure Musk had to cut by 50%, if only because Twitter's interest payments are now significant. However, that does bring significant challenges.
> However, there was no need to gut the company to make it profitable.
There was a need and it was going to happen anyway. Clearly slashing headcount earlier even without Elon, would have easily made it even more profitable.
Their mistake was that they didn't do it earlier enough. It just took Elon to do it for them. 7K headcount wasn't sustainable regardless and a 50% - 60% cut in staff makes sense for Twitter.
But why would he bother? If the company was really in such bad shape, why not just let it fail and create a competing service (for a lot less than $44B)?
In any case, from my perspective Twitter didn't really make serious mistakes. They got $44B for the company despite its issues.
> But why would he bother? If the company was really in such bad shape, why not just let it fail and create a competing service (for a lot less than $44B)?
The value in Twitter is its network effect, social inertia and integrations in hundreds of thousands of websites, blogs, apps and APIs with 220M+ daily active users still using it every day.
Recreating that from scratch makes absolutely no sense. There is no serious alternative to Twitter and it is better to buy it instead of building it all over again.
> In any case, from my perspective Twitter didn't really make serious mistakes.
Twitter clearly over-hired like the rest of the tech companies and was wasting millions a day. It is either the mounting costs would get them in the end or someone else would reverse that downward trend to insolvency.
Drastic action was the appropriate method to stem the losses.
Twitter generated $5 billion revenue in 2021, a 35% increase on 2020 figures and a significant improvement on the 8% and 13% increase the two years before.
Cut backs were needed, as advertising revenue would have been significantly down this year, given the economic down turn. However, there was no need to gut the company to make it profitable.