Every time I open X — formerly Twitter — as I do in order to read up on current events, I wonder when my timeline turned into a right-wing cesspool. Where I used to get funny, incisive takes on political stories, now I get a bunch of idiotic tweets from Ted Cruz and Marjorie Taylor Greene.
Nobody wants that.
Elon Musk doesn’t seem to get that, though. His takeover of the social media giant was nearly a year ago, and since then, he has messed it up so bad that declining ad revenue has turned it from a $44 billion company when he bought it into something worth about $8 billion.
Worse news for Musk is the fact that the company’s debts to the banks that financed his takeover amount to roughly $13 billion.
These numbers come from estimates made by Reuters in a special report they did on the failing company:
“Put it all together, and X isn’t just worth less than Musk paid for it, but likely less than its debt. Assume that the company’s revenue last year was $4.7 billion, based on results before it was taken private. If advertising has dropped by half, then this year’s sales should be a bit over $2.5 billion. Put that on the same enterprise-value-to-sales multiple as Snap, which is down to a mere 3 times, and X is worth around $8 billion.
The company is so far covering its hefty interest payments of $300 million per quarter, and [X chief executive Linda] Yaccarino sees profitable days ahead. But between Musk’s impromptu product shifts and the need to woo back advertisers, her task is daunting. If things deteriorate further, the company’s bankers – already nursing billions in on-paper losses – face the prospect of taking back the keys to a diminished platform that is worth less than even their claim on it. Like a financial black hole, X threatens to consume most of whatever value it once had.”
Among the hare-brained ideas Musk has implemented, his decision to go subscription-based in the near future has caused user interaction to plummet. Combined with the fact that Musk made the high-profile status of a “blue check” worthless by allowing anyone who wants one to just buy it, you have a recipe for disaster.