On 28 October 2022 Elon Musk tweeted “the bird is freed” as he marked his $44bn acquisition of Twitter.
Nearly six months later, it became a dog. The distinctive avian logo the Tesla CEO had referenced in October had been replaced by a picture of a Shiba Inu canine – the face of the Dogecoin cryptocurrency.
There was speculation over what was behind the change. Was it linked to a recent attempt to dismiss a $258bn lawsuit filed against Musk by Dogecoin investors over an alleged pyramid scheme? Was it a delayed April Fool’s gag?
Whatever the reason, the dog has now gone. But the episode was exemplary of Musk’s decision-making style at the social media company: erratic, and sometimes, inscrutable in motivation.
As we approach six months of Musk’s acquisition of Twitter, it remains far from business as usual at the company. In the past week alone, there has been a spat with Substack, further problems with the site’s infrastructure and NPR, the US radio network, has quit the platform. Musk himself admitted in an interview with the BBC that running Twitter had been “painful” and that buying it had come with “emotional strain”.
Here’s a look at how key areas of Twitter’s business have performed.
Debt and company value
The end of the month does not just mark six months since Musk’s purchase, it is also the due date for the second quarterly instalment on paying down Twitter’s $13bn debt burden (a payment of about $300m).
When the first payment approached in January, it was against a backdrop of doom-laden warnings from Musk, who had cautioned shortly after the takeover that “bankruptcy isn’t out of the question”.
True, Musk had paid $44bn for a business that had been largely loss-making since its launch in 2006. But his own decisions at the platform had led to an advertiser boycott that had caused significant damage to the platform’s main source of revenue (more than $5bn in 2021).
Last month it emerged that Twitter is now worth less than half of what Musk paid for it, having lost more than $20bn (£16.4bn) in value, according to calculations based on a leaked memo.
Financial performance
Once at the helm, Musk slashed costs and, last month, the CEO said he thought Twitter had a chance of turning cashflow positive – broadly, spending less cash to run the business than it takes in – in the current quarter. He repeated the claim in the BBC interview. In March he told a Morgan Stanley conference in San Francisco that Twitter’s revenue was due to drop to less than $3bn this year but expenditure had dropped from $4.5bn to $1.5bn.
Aswath Damodaran, a professor of finance at the Stern School of Business at New York University, says Musk’s high-risk approach could pay off for a platform that was struggling for financial stability even before the chaotic takeover.
“Twitter has always been a basket case as a business, unable to monetize its users into advertising revenues and the status quo was getting them nowhere,” he says. “Musk, as is his won’t, has been a chaos agent, unfocused and unpredictable, but I would think that Twitter stands a chance of making it out of the forest, precisely because of this chaos.”
Indeed, Musk recently folded Twitter into an entity called X Corp. Musk has referred to Twitter as being an “accelerant” for creating X, his “everything app” akin to WeChat in China.
User base
A self-declared“free speech absolutist”, Musk early on chose to reinstate accounts that had been banned under the platform’s previous owners. Those included the accounts for Donald Trump, misogynist influencer Andrew Tate and the personal account of the far-right US congresswoman Marjorie Taylor Greene.
According to Musk, users have not fled the platform in response. Musk said in November that Twitter’s user numbers had crossed 250 million, up from 238 million before the takeover.
The controversy around account reinstatement, the threat of losing blue-check status and Musk’s dislike of mainstream media, including banning some prominent reporters, also do not seem to have deterred the journalists and influential pundits who use the platform regularly (see the Gary Lineker tweet that drove a whole news cycle recently).
“Despite all the talk that journalists would be leaving Twitter, in practice very few have done so because it remains an important part of workflows, with networks that have been built up and carefully curated over the years – as well as being a compelling and amusing distraction,” says Nic Newman, a senior research associate at the Reuters Institute for the Study Journalism.
“Our data suggests that there has been no substantial drop-off in the number of people that use it weekly – though that may well come.”
Staff
In an effort to dramatically cut costs, Musk axed half of the company’s 7,500-strong workforce within days of sealing the takeover and reduced it further through a series of cuts including a bizarre redundancy program where staff were asked to commit to being “hardcore” or leave. Such was the chaotic reaction to that ultimatum, Twitter was forced to shut offices temporarily.
According to one former employee who was made redundant following the takeover, the platform has gone backwards. “For many of us former tweeps, seeing what Musk is doing to Twitter is heartbreaking,” said the former staff member, speaking on condition of anonymity. “The platform has regressed in terms of toxicity, safety and nuance. The hard work of dedicated teams and colleagues over the years has been erased, including efforts to combat misinformation and create trustworthy safety policies and curation standards.”
Advertisers
Concerns over Musk’s erratic decision making, approach to content moderation and a botched relaunch of Twitter’s Blue subscription service underlined Musk’s revenue projections last month. At one point in January, the company’s daily revenue was down 40% year-over-year, according to the tech newsletter the Platformer and some boycotts remain in place. Pharmaceutical firms Eli Lilly and Pfizer, retailer Macy’s and Cadbury owner Mondēlez spent no money on Twitter in the first two months of the year, according to the advertising data firm MediaRadar. However, MediaRadar said there were 3,700 companies advertising on Twitter in February – 8% more than the same period last year (although some, like Volkswagen, General Motors and Chipotle, have reduced their spending significantly).
Nonetheless, there are signs of life.
“Just this past couple of weeks we’ve seen the first signs of recovery, as a few advertisers are now talking about Twitter ads again,” says Farhad Divecha, the managing director of the UK digital marketing agency AccuraCast. “They’re now coming to us asking about it, rather than us asking them if they’re ready to reconsider Twitter – and them declining.
Twitter Blue relaunch
Determined to reduce Twitter’s reliance on advertising, Musk has invested big in the relaunch of Twitter’s subscription services. The first relaunch of Twitter Blue, in November, was paused after it led to a slew of fake “verified” accounts.
The company tried again in December, offering subscribers perks such as a blue tick – giving your account more prominence on the For You feed – and fewer adverts for $8 a month on the web or $11 on iOS or Android.
According to Travis Brown, a software developer who has been tracking Twitter’s subscription service, the new-look Blue has about 550-585,000 subscribers which equates to $4m+ a month in revenue. Twitter will need many more sign-ups to offset the advertising loss.
Meanwhile, the 400,000 legacy blue checks face a loss of status. Musk told the BBC that these checks will be phased out by next week, although a deadline has been missed before.
Site performance and regulators
Twitter has been hit by a series of outages since it was bought. In the latest breach, users reported that Twitter’s privacy-friendly Circles feature was leaking private user data.
The US Federal Trade Commission is investigating the company amid concerns that Twitter’s ability to protect users, and comply with a 2022 deal with the FTC to maintain high data security standards, might have been affected by redundancies and cost cuts.
“The FTC’s investigation is quite serious,” says David Vladeck, a professor at Georgetown University Law Center. “There is deep concern within the FTC as to whether Twitter is, in fact, making a concerted effort to bring it into compliance with the May 2022 consent decree.”
Vladeck says that unless Twitter “ups its game” another enforcement action, including “substantial civil penalties”, looms.
An emailed request for comment sent to Twitter’s press office was met, as is now standard practice at the company, with a poop emoji.
