Elon Musk doesn’t have a great track record of saying things that then come true. Or, put another way, he loves to make promises and then break them. Or, put yet another way: the man is full of it. For instance, he’s repeatedly said his biotech device company, Neuralink, is nearing human trial approval. Spoiler alert: it’s not.
So perhaps take his most recent comments with a grain of salt. In an interview at investment firm Morgan Stanley’s tech conference, Musk claimed that all of his cost cuts at Twitter (like the mass layoffs and cuts to employee benefits) have paid off. “I think we have a shot at being capital-positive next quarter,” he said at the event, which was also live streamed via Twitter. Musk further claimed that his platform’s user numbers were up, contributing to the gains.
While it’s impossible to predict the future and say for certain that Musk’s new claim about Twitter’s finances is 100% untrue, Gizmodo can tell you that it is… very unlikely. Just a couple months ago, the man was reportedly looking to raise $US3 ($4) billion from investors and claiming bankruptcy was a distinct possibility for the social company. There’s also the fact that Twitter’s under fire for not paying commercial rent at some of its office buildings. Sure that might initially save some money up front but that certainly won’t make up for any of the various legal fees being racked up in the long run.
Shall we quickly go back to Musk’s many broken promises? There was that time in 2016 when the multi-hyphenate CEO wrote that Tesla would expand its EV vehicle line to “address all major segments” of transportation, including “high passenger-density urban transport,” within a year. It didn’t. And, in fact, Musk has since seemed to abandon any pursuit of mass transit technology, aside from the extremely lame, Las Vegas “loop” which is not really mass transit at all, but instead a glorified single-lane tunnel.
How about when Musk he said he wouldn’t fire three-quarters of Twitter staff, following his acquisition of the platform? Well, he did — and then some.
As part of Musk’s $US44 ($61) billion Twitter purchase, he saddled the social company with nearly $US13 ($18) billion in loans. The first interest payment on that debt, alone, likely cost an estimated $US300 ($416) million. Managing the debt will cost the company an estimated $US1 ($1) billion per year, according to Bloomberg. To make up that difference, Musk would have to offload more than 8,500 employees (about ~1,000 more than Twitter had prior to Musk’s takeover), assuming an average salary of $US117,000 ($162,419)/year.
Though Musk has hollowed out Twitter to the best of his ability so far, there’s simply not enough people for him to fire to recoup the costs incurred by purchasing the company in the first place. Plus, we know that he’s had to bring on at least two new staff members: his bodyguards. The billionaire has made so many (real or perceived) enemies at the social media platform he now owns, that he is accompanied at all time by at least two beefy security men — even on bathroom trips, according to a BBC report.
Then, there’s all the advertising revenue Twitter has lost and the failure of attracting subscription revenue through Twitter Blue. Though Musk claimed his platform was gaining users, that doesn’t necessarily translate to an increase in revenue. Further, now that Twitter has gone private, the company isn’t required to report things like user numbers, or revenue — there’s minimal accountability here.
Finally, history doesn’t bode well for the validity of Musk’s “capital-positive” soon promise. Prior to the billionaire’s acquisition, Twitter had only ever had one profitable year (2019) in its near-decade as a public company. Though it’s a website that’s good at vacuuming up my time and attention, it’s not great at making money.
Among other bonkers things Musk said during the conference interview: that Tesla’s next generation car would operate mostly autonomously, according to Reuters. Even though Tesla’s driver assistance software is currently on pause after a safety recall, and the company is facing multiple federal investigations over possible false claims and safety issues related to the the (not) “Full Self-Driving” feature.
Musk further opined that X, his theoretical “Everything App” could “become the biggest financial institution in the world,” despite not yet existing. He also described Twitter as a more reliable, less bias news source than the news media, and essentially said that, without his platform, democracy and civilisation on Earth could fall apart entirely.
Bonus: Towards the end of the Morgan Stanley interview, Musk claimed SpaceX advances would make life multi-planetary, and waxed poetic about the numerous long-dead “one-planet” civilizations he believes once existed around the universe.
All in all, it’s a whole bunch of big predictions from a guy who can’t even deliver a truck on time.