Telling advertisers to “screw themselves” is usually a winning strategy if you’re running a social media site that relies on advertising revenue.
And Elon Musk, former owner of X, is doing it the hard way.
Or if it already is, it is about to be. Because, while suing those advertisers for not buying classified ads on Twitter (which is exactly what he told them to do), the company is in one of its worst financial troubles yet: in the United States, according to internal figures received through the New York Times, a 53% drop from the same quarter last year.
Now, as Fortune reports, the scenario is so dire that even Tesla’s oldest investors expect that Musk will possibly have to sell some of his own shares of the automaker to his failed website.
“I would expect $1 billion to $2 billion in stock,” said Bradford Ferguson, president and chief investment officer of asset manager Halter Ferguson Financial in a YouTube comment on Wednesday, cited by Fortune, noting that this could lead to a fall. of the action. It loses between five and ten percent of its value.
“It’s a huge gap that they have to fill,” he added.
This is the last resort Musk has used in the past.
In 2022, after several disastrous months following his acquisition of Twitter in the fall, Musk sold more than $7. 5 billion worth of Tesla stock between November and December. He said he would “definitely” sell again until at least 18 to 24 months after that. or “probably” until 2025.
But he also made a pledge that same year, in April, after selling about $7 billion worth of the automaker’s stock to fund his deal with Twitter.
The fact is, Musk is willing to fool his own investors to get out of a huge monetary hole, one that Fortune says looks like a staggering 84% drop in profits through the second quarter of 2022, before his purchase. in private.
And it’s not just the advertising crisis that contributes to the site’s decline. The number of active users is down about 23%, according to a study published in March.
With all this in mind, Musk will have to see what’s going on at the wall at some point, which means he could turn to stock promotion again.
“The hemorrhage from the car manufacturer.
Ferguson says Musk may need the money to meet the terms of his loan agreement for $13 billion in debt incurred through Twitter as part of his plan to buy the platform.
Whatever decision Musk makes to get his way, Twitter’s current trajectory on the enterprise front is far from sustainable, and it turns out it’s only a matter of time before its owner’s reckless decision-making happens again.
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