Many people who use Twitter the most frequently recently stopped using it at all. This presents new owner Elon Musk with a problem he may be unable to solve. The financial results needed to support the deal’s debt could deteriorate instead of improving.
Twitter Inc. (NYSE: TWTR) is losing its most active users, internal documents show. According to Reuters, “heavy users” create about nine of ten tweets each month. Heavy users also number about 10% of users, and they generate about 50% of Twitter’s revenue. Reuters reports that the information comes from a report titled “Where Did the Tweeters Go?”
The best reference for the effects of this problem is Twitter’s quarterly financials. Twitter’s revenue was $1.2 billion in the most recently reported quarter. Even a drop of $100 million would drive Twitter well into the red. Advertising revenue already has started to decline because of the recession’s impact on marketing budgets.
Musk may have only one choice to offset the drop in revenue. There are rumors he could cut as many as half of Twitter’s employees. This would mean the company could not monitor bad actors. And the effect on morale would be harsh enough for the best people left to seek jobs elsewhere.
Twitter’s annual debt service may be in the hundreds of millions of dollars. Financial firms that supported Musk’s ownership are already concerned they will take huge losses. If the Reuters report is accurate, this is a certainty.
It may be that the worst of Twitter’s multiyear slide began to doom its future as a growth company. That growth is all that has supported its stock, which has dropped by double-digit percentages this year. The only thing that has kept it from collapsing is Musk’s buyout.
24/7 Wall St.Musk tried to pull out of the Twitter deal, and that would have cost him over $1 billion. Now, that sum seems cheap compared to what the company will lose in the future.
The Average American Is Losing Momentum On Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4%1 today. Checking accounts are even worse.
But there is good news. To win qualified customers, some accounts are paying more than 7x the national average. That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn a $200 bonus and up to 7X the national average with qualifying deposits. Terms apply. Member, FDIC.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.