Twitter reported revenue growth as Elon Musk prepares to take over

SAN FRANCISCO – A few days before Elon Musk signed a $ 44 billion acquisition of Twitter, he said he was not interested in the company’s economy. As the richest man in the world with a fortune of more than $ 250 billion, he noted that making money through social media services was far from his main goal.

But on Thursday, Mr. Musk was able to get a closer look at the strength of the business he is buying.

Twitter said its revenue was $ 1.2 billion for the first three months of the year, up 16 percent from a year earlier but lower than the 20 percent growth rate the company forecast for the year. Earnings were $ 513 million, or about 61 cents per share. Wall Street analysts expected revenue of about $ 1.2 billion.

The social media company said it has 229 million daily active users, which is almost 16 percent more than the previous year.

Mr. Musk’s deal on Twitter is expected to be completed in the next three to six months. Mr Musk, 50, who also heads electric car maker Tesla and rocket company SpaceX, has vowed that Twitter will be privately owned and will make it a haven for “freedom of speech”. In recent days, he has criticized some of Twitter’s top executives for helping to shape the company’s policies on what should be allowed on the speech platform and what not, which has caused a stir.

But even if Mr. Musk says he is not interested in Twitter’s business, investors will carefully examine the company’s financial condition to see how it might influence the deal. Investors look at specific metrics for Twitter’s profit – its interest income, interest on taxes, depreciation, amortization, or EBITDA, which is widely used for cash flow – to assess whether a company can pay off debt and interest that it’s owned. Musk’s deal will add to his balance.

Mr Musk is financing his acquisition of Twitter with $ 13 billion in debt and $ 12.5 billion in credit to his shares in Tesla. It is expected to add about $ 21 billion in equity funding.

Twitter executives have been asking questions for years about the company’s business prospects, which rely heavily on digital advertising. This business was inconsistent. Twitter has not made eight profits in the last 10 years. In 2020, activist investment firm Elliott Management took over Twitter and called on Jack Dorsey, one of its founders, to resign as CEO. Mr. Dorsey resigned last year.

“Although Twitter has seen an increase in advertising, its advertising business is much smaller than that of other major digital players,” said Jasmine Engberg, an analyst at Insider Intelligence. “It is also still difficult to bring in new customers, which is an integral part of increasing advertising revenue.”

Before Mr. Musk got involved, Twitter executives set an aggressive trajectory for the company. The plan is for it to grow rapidly over the next two years, reaching 315 million daily active customers and $ 7.5 billion in annual revenue by the end of 2023.

Twitter did not provide guidance on its future financial performance on Thursday.

The acquisition of Mr. Musk may give Twitter the opportunity to make changes to its product as a private company to avoid Wall Street scrutiny. The company’s close observers have long noted the reluctance of Twitter to reconsider drastic changes due to the protests of its service users and the sensitivity of advertisers.

But Mr. Musk might throw the company into even more turmoil. In addition to targeting the Twitter executive through the service, some users have left the platform under Musk’s guidance because of Twitter’s perspective. Within the company, some employees have also expressed concern about what changes Mr. Musk has made to the service.

At a company meeting on Monday, Parag Agrawal, chief executive, acknowledged the uncertainty ahead. “When the deal is closed, we do not know where the company will go,” he told Twitter.

Anupreta sister Contributed to the report.

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