The world's wealthiest man, Elon Musk, has reportedly been telling staff at his newly purchased social media platform, Twitter
In order to purchase Twitter for $44 billion last month, Musk put the company in $13 billion in debt. That debt is roughly seven times the platform's projected earnings for the year, according to NPR, and it will face a yearly fee of $1 billion. For 2021, Twitter reported that its annual cash flow was just $632 million.
"It's hypothetically possible that he could use more of his Tesla stock to bail out Twitter, or turn to his cadre of co-investors, who would probably have no trouble finding the money," an assistant professor at Harvard's business school, Andy Wu, told NPR.
However, according to Wu, it's also possible that Musk and his investors will decide that Twitter isn't worth taking out more debt, leaving bankruptcy as the only option. This would mean that Musk would continue to serve as CEO, and the company would continue to function as normal.
Considering that analysts widely agree that Musk overpaid for Twitter, it's likely that the tech billionaire won't want to spend more on the platform.
Last week, Musk said that Twitter has been losing $3 million every day since he took over, and he's been scrambling to wring more money out of the platform. Along with laying off at least half of the company's staff, the tech billionaire has also introduced a highly criticized $8 per month subscription for verification.
While Musk touted the subscription as a way to make the verification system more accessible for everyday users, the actual impacts have been far more chaotic.
Before the change, the verification system served as a way for users to tell which accounts belong to well-known figures and entities, but the new subscription structure led to a flood of verified pranksters impersonating significant accounts, including former-President Donald Trump and the pharmaceutical company Eli Lilly
After a fake Eli Lily account with a verified checkmark posted that insulin would now be free for diabetic customers, the company's stock value dropped by more than 5% and the real Eli Lilly had to post an apology for the misinformation. The apology post has received widespread pushback from users criticizing the high price of insulin, including U.S. Senator Bernie Sanders.
To crack down on the confusion, Musk announced that users impersonating verified accounts without a clear parody marker would be banned without warning, and the Twitter Blue verification is no longer available for purchase. During its brief existence, the $8 subscription didn't bring in the sort of money Musk had hoped.
More recently, it was also revealed that Twitter had filed the paperwork to become a registered online payment processor, a feature that could represent a major new revenue source, but registration and implementation will take time.
