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Comment by bkor | Hacker News Reader

> They have a run rate > 4 billion a year even after all those layoffs?

I highly recommend reading the following article:

https://www.npr.org/2022/11/30/1139964806/how-elon-bought-tw...

Elon Musk bought Twitter with "loans". The interest of those loans are now a responsibility for Twitter. Meaning did NOT have a huge run rate. The leveraged buyout caused this.

There have been an insane amount of focus that the huge predicted losses are a result of lazy overpaid developers. This while ignoring that Elon Mush did a leveraged buyout. The number of employees wasn't the issue, making Twitter responsible for billions in loans while the interest rate of those loans went up is the problem.

Elon Musk keeps complaining about the federal reserve and the interest rate. He's complaining for a reason. He gambled and couldn't back out.

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> spent $13 billion of borrowed money on the acquisition.

Assuming Twitter is breaks even otherwise (give or take a few hundred million) for it to hit 4 billion wouldn't that be like 30% interest? Not impossible, but that seems really high to me.

This has his unsecured loans at something like 11%[0] that seems more reasonable and would have the loans costing around one and half billion.

[0]https://www.reuters.com/business/musks-bankers-mull-new-tesl...

It's because the revenue fell heavily (first the uncertainty concerning the buyout, then Elon himself and his attacks on brands didn't help). I've read the interests would cost him a billion, and twitter lost revenue is like twice that.

4 billions seems a bit excessive, but 2.5-3 wouldn't surprise me.

To have 4 billion in losses don't you have to have 4 billion in costs? If loans are a billion that means Twitters overhead even after laying off 75% of the staff and cutting free lunches etc is over 3 billion. What makes me question that is you can build a football stadium every six months for that money or an aircraft carrier every 18 months, and those aren't examples of particularly efficiently ran projects. That seems like a lot for what they do.

I could see perhaps a 2.5-3 billion loss with severence payments, lawsuits and the media uproar next year but that will pass eventually. The real question is what things look like once that dies down. I don't think he will make his money back but historically when captains of industry for lack of a better term buy media outlets that rarely happens anyway (Did Bezos make money on the Washington Post, they are taking about layoffs right now). 4 billion just has the little accountant in my head going "wait a minute".

Looking at their past 10-k, cost of revenue is ~$1.8B which includes infra costs. As these are self hosted, infra costs are largely going to be fixed; with a smaller component scaling with usage (things like electricity and maintenance).

Usage going up, and taking a 50% haircut on revenue would make quite the dent in cash flows.

Think I found the guy who this 4 billion dollar estimate is from: https://www.tipranks.com/experts/analysts/daniel-ives

Doesn't have a great track record.

I get it, i understand the 4B figure (and i was very wrong with my 2.5B figure)! I'ts because the advertisment revenue is down 90%. 90% of 4.5B is roughly 4B, hence TFA number i guess.

Now, it's only down that much since november, but it was still down 50% in october (due to the buyout and uncertainties, not Elon's policies), and it was already under last year results this summer. You see the issue? TFA (and me in believing without understanding) fucked up the calculations.

So. Let's not be charitable, and take the worst case scenario:

- Debt service: 1B,

- Cost reduction: Mostly inexistant due to severance package,

- Revenue reduction: 350*2(november-december) + 200 (october) + 200 (rest of the year): 1.1B

Total hole: 2.1B (worst case)

A charitable napkin calculation would be .5B.

I personally think twitter is loosing more than just the debt servicing, because some payments are very late, and it seems that severance package are hard to get for ex-employees. I don't think he would have done the policy change, or have tweeted what he has tweeted either if it was just money (i'm being very charitable here, as an excuse to Elon fans for being a bit of an ass in prior comments)

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