Twitter cost-cutting averted US$3 billion shortfall, Elon Musk claims

Twitter boss Elon Musk said the platform was on course to hit US$3 billion of negative cash flow prior to the recent round of severe cost-cutting.

“That is why I spent the last five weeks cutting costs like crazy,” Musk said during a Twitter Spaces hosted late on Tuesday. “This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work.”

Musk bought Twitter for US$44 billion in October, partly financing the deal with almost US$13 billion of debt with interest repayments of around US$1.5 billion a year. He has drastically cut costs including laying off more than half of Twitter’s staff, and has since confirmed he’d step down as chief executive officer once an appropriate replacement was found.

Twitter was on course to post revenue of around US$3 billion, with around US$1 billion in cash on its balance sheet, Musk said.

“I now think that Twitter will, in fact, be okay next year,” Musk said, and he expects the company to “roughly” hit cash flow break-even. He added that advertisers have been asking “sane” but “tough” questions about their return on investment for buying ads on the platform.

Twitter was on track to record around US$5.2 billion in sales in fiscal 2022, prior to Musk taking the company private, according to analyst estimates compiled by Bloomberg before to transaction’s close on October 28.