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Elon Musk: Twitter is Going to Be Cash Flow Positive in Q2 of This Year

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Khal
@khaleelkazi
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4 min read

Elon Musk spoke at a Morgan Stanley conference yesterday and talked about Twitter and Tesla. The discussions were primarily focused on Twitter - which is pretty relevant as Morgan Stanley was one of the institutions that loaned Elon a total of $13bn ($3.5bn of it from Morgan Stanley).

In their talk, Elon said that Twitter might be cash flow positive in Q2. Twitter's projected costs in 2023 are $3bn - 1.5bn less than the 4.5bn estimate from before his takeover.

What's Driving Their Return to Cash Flow Positive?

I love digging into businesses and looking at their cash flow matrix. This is one of the most fascinating things that public companies provide us - a true look into the health of the business, if you know where to look.

The problem with Twitter is that it is no longer a public company. It no longer has public statements that need to be reported to shareholders. This means that we have limited access to financial data about the company.

Elon is giving us a look into their current and future projections but that's really all we can get as outsiders looking in.

Elon talked about a massive decline in advertising - we all saw this happen. Advertisers left Twitter and denounced it, citing that there is bad content on Twitter now since Elon is not partaking in the virtue signaling removal of all "bad actors" from Twitter. Less censorship is a bad thing to advertisers.

But really, it's not just that. There is virtue signaling going on in just the idea of not advertising on Twitter. Even Apple talked about removing Twitter from the App Store.

It's no secret that the mainstream hates Elon Musk. They made it that much more blatantly obvious since his takeover of Twitter. Even celebrities talked about leaving the platform.

  • Cost Cutting
  • New & Better Revenue Streams

Cost Cutting

Elon has led a revolution in the tech space. Even companies like Facebook are using Elon Musk's takeover of Twitter as aircover to lay-off massive amounts of employees.

The biggest news cycle we've seen in 2023 has been Elon firing people at Twitter. The company had way too many employees and you can even find some funny videos online where people posted "a day in the life as a Twitter employee" before Elon's takeover. It was all cappucinos in the clouds and doing a whole lotta nothing.

Elon came in and made sure that dream was ended quickly. Now Twitter is running a lean team and they've pushed more features in the last few months than in the last few years under the old leadership.

Software companies can run incredibly lean. I've learned this in running the LeoTeam and building out our core developers and team members. You don't need dozens of employees, hundreds of employees let alone tens of thousands of employees to build great software.

Elon wasted no time in coming in and cutting costs. If you've heard him talk about Twitter in the past, then you'll know he said it was on the brink of death. Coming in and having a swift hand is what was needed to save the company. I believe in being able to turn the ship quickly when things aren't going right. Elon is the grandmaster wizard of business and he is just flexing his muscles once again.

New & Better Revenue Streams

$8 a month has become a massive meme but it's also become a massive source of revenue for Twitter.

Software companies NEED to leverage monthly subscription revenue. Recurring revenue is one of the best ways to bolster the financial health of a company.

Looking at Coinbase, you can see them making a leap into this with Coinbase One.

This is a great move by Twitter. Recurring revenue is a huge deal and I think the $8 a month will end up being one of the key things that saves the company and turns it into a profit machine. Hell, even Zucks had to step out and copy him with FB's $11 / mo program.

Elon also said that he's working on more targeted advertising - allowing advertisers to target users based on keywords and interest.

"Twitter was 'poorly monetised', with it making 5 to 6 cents per hour per user, he said, adding that he hoped to raise this to at least 15 cents an hour."

I've always been a huge fan of Elon. He's a controversial guy - but then again, all great people are controversial in one way or another.

Watching him take over Twitter and turn it into a cash flow behemoth has already been fascinating and I think we're in for a whole lot more action. Stay tuned.

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