SAN FRANCISCO – Days before Elon Musk struck a deal to buy Twitter for $44 billion, he said he “didn’t care about the economy” of the company. As the world’s richest man, with a net worth of over $250 billionhe indicated that making money from the social media service was far from his main goal.
But Thursday, Mr. Musk got a closer look at the strength of the company he’s buying.
Twitter reported that revenue for the first three months of the year was $1.2 billion, up 16 percent from a year earlier, but lower than the company’s 20 percent growth. predicted for the year. Earnings were $513 million, or about 61 cents per share. Wall Street analysts had expected revenue of about $1.2 billion.
The social media company said it had 229 million daily active users, up nearly 16 percent from a year earlier.
Musk’s deal for Twitter is expected to close in the next three to six months. Mr. Musk, 50, who also heads electric car maker Tesla and rocket company SpaceX, has vowed to keep Twitter private and make it a haven for “free speech.” In recent days, he has criticized some of Twitter’s top executives for helping build company policies about what speech should be allowed on the platform and what not, thereby a commotion†
Out of Opinion: Elon Musk’s Twitter
Commentary by Times Opinion writers and columnists on the billionaire’s $44 billion deal to buy Twitter.
But even if Mr. Musk says he doesn’t care about Twitter’s business, investors will examine the company’s financials to see how it could affect the deal. Investors will look to a particular earnings metric from Twitter — its earnings before interest, taxes, depreciation and amortization, or EBITDA, which is widely used as a proxy for cash flow — to gauge whether the company can pay off the debt and interest it pays. mr. Musk’s deal will be added to his balance sheet.
Twitter executives have been asked over the years about the prospects for the business of the company, which relies mainly on digital advertising. That company has been inconsistent. Twitter has not made a profit in eight of the past ten years. In 2020, activist investment firm Elliott Management took a stake in Twitter and called on Jack Dorsey, one of its founders, to step down as chief executive. mr. Dorsey has resigned last year†
“While Twitter has seen an uptick in ad growth, its ad business is significantly smaller than other major digital players,” said Jasmine Engberg, an analyst at Insider Intelligence. “It also continues to struggle to bring in new users, which is an integral part of growing ad revenue.”
Before Mr. Musk got involved, Twitter executives charted an aggressive trajectory for the company. The plan is to grow rapidly over the next two years to reach 315 million daily active users and $7.5 billion in annual revenue by the end of 2023.
How Elon Musk Bought Twitter
A blockbuster deal. Elon Musk, the world’s richest man, put an end to what seemed an unlikely attempt by the famed mercurial billionaire to Buy Twitter for about $44 billion† Here’s how the deal unfolded:
Twitter did not provide guidance on future financial performance on Thursday.
Musk’s acquisition could give Twitter the ability to make changes to its product as a private company, avoiding Wall Street’s scrutiny. The closely-watching company has long noted Twitter’s reluctance to overhaul its service due to user protests and advertisers’ sensitivity to drastic changes.
But Mr. Musk may also throw the company into more turmoil. Aside from his targeting Twitter’s executive through the service, some users have: left the platform about the prospect of a Musk-led Twitter. Within the company, some employees have also expressed concerns about: what changes Mr. Musk has in store for the service.
In a company meeting on Monday, Parag Agrawal, the CEO, acknowledged the uncertainty ahead. “Once the deal is done, we don’t know where this company will go,” he told Twitter employees.
Anupreeta Das reporting contributed.