What would Social Media be if both Twitter and TikTok were to vanish in the next six months? Utter chaos, perhaps? While that sounds rather far-fetched, it might be more likely than we take it for. With TikTok continuously facing a potential ban in the US due to supposed privacy concerns, and Twitter’s treasury continuing to bleed out, it could be that both could end up disappearing, and with them, all of the effort you put to build up a presence on these platforms.
Downwards Trend
According to various reports, the latest news with Twitter is that its revenue plummeted 40% this year, partly due to the broader downturn in digital advertising, as well as ongoing concerns about its new CEO’s roadmap for the app. If that’s true, it could put Twitter in a sticky operating situation because while it no longer loses $4 million a day, it’s not really earning anything back to compensate. Twitter brought in around $1.57 billion in revenue during its Q4 in 2021. If it went down by 40%, that amount is effectively just $942 million only a year after. Yeah, quite the conundrum.
It’s not sure if they included Twitter Blue in this revenue calculation, but let’s assume that it didn’t – current estimates suggest that around 225,000 users have signed up for Twitter’s new $8 per month verification program. That equates to Twitter roughly bringing in $1.8 million per month from subscriptions alone. While the updated program hasn’t been active for 3 months, let’s assume that it was – we’d be looking at around $948 million in Twitter revenue for Q4 2022, based on these estimates.
In Q2 2022, Twitter’s staff costs were $950 million. Since taking over, Musk cut staff numbers down significantly, while we don’t know how much this has impacted Twitter’s overall revenue generation, let’s base it on Musk’s 75-80% staff cut – that brings $950 million down to $190, which is pretty good. Within the same period, Twitter’s operating costs totaled $540 million, which Musk has also reduced by shutting down data centers and international offices, so this amount should go down in the future. So, this plus the adjusted staff costs brings Twitter’s total expenses to $730 million. Compared to $948, that’s a lot more funds saved.
Next, to finance his $44 billion takeover purchase, Musk took out $13 billion in loans, which the company will now have to repay at around $1.5 billion a year. Divide that by four, and Twitter faces an extra $375 million per quarter, bringing the total to $1.1 billion, leading to a quarterly loss of $152 million, which comes out to $1.7 million a day – far better than the initial $4 million a day claim by Musk.
The Wrap
Twitter’s hope now lies in the take up of its $8 verification program, video monetization, and subscription program for businesses as they are expected to replace the 40% loss in ad income. With all of its staff cuts and office shutdowns, if Twitter can bring its costs down by another $152 million per quarter, it’s potentially moving closer to even footing once again, which could mean that Musk would be able to continue in his efforts to ‘free’ the app by easing its moderation, without having to worry about ad partners unease with such decisions. However, each of the above-mentioned cuts also has its impacts, and it could be that Twitter’s reduced oversight and loss of market connection would only work to increase the challenge before it. So far, everything is on a theoretical seesaw, so the possibility of Twitter uttering its last Tweet is real.
Please note:
This action will also remove this member from your connections and send a report to the site admin.
Please allow a few minutes for this process to complete.
