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Okay here are my reasons for betting yes:
- X CEO Linda Yaccarino mentioned that the company is showing progressive positive cashflow and is close to breaking even already and will turn profitable by end of 2024 at the latest, which is re-assuring but still not factual.
- According to her, 90% of the top 100 advertisers have been returning to the platform already since April 2023.
- Major reduced payroll spending since the company has gone from 8,000 employees to a mere 1,500 while not paying them severance as well which helped the company retain extra earnings.
- Time users spend on X has gone up noticeably since June 2023.
- Elon Musk introduced the paid verification subscription service bringing in major cashflow since the overall user traffic has also gone up.
- The platform has achieved its highest ever user count of 253 million monetizable users in 2023.
- The company is formally aiming for a positive cashflow by the end of quarter 2 2024 not end of quarter 4 which is a good sign.
@AhmedHazemc68a I agree that X has a chance to become profitable by the end of 2024 if the current cost-cutting measures continue. X has reduced its workforce by about 7,500 employees or 50% according to their SEC filings in Q3 2022 (Twitter, Inc., 2022). As a result, X now has fewer than 4,000 employees, down from over 7,500.
Based on PayScale salary data (PayScale, 2023), the estimated average salary is $117,105 per year. This could lead to potential savings of about $439 million per year (7,500 * $117,105 / 2). To put it into perspective, X's earnings decreased from $5.1 billion in 2021 to only $30 million in Q2 of 2022 (Twitter, Inc., 2022). Therefore, annual savings of $439 million is a significant increase.
By optimizing expenses such as real estate and infrastructure under the new leadership, these statistics show that significant cost reductions are possible, putting profitability on track for recovery within two years.
Although there are still risks involving advertising demand, the amount of savings identified suggests that X is on a feasible statistical trajectory to become profitable by the end of 2024 through transformative measures already being implemented.
PayScale. (2023). Average Twitter salary. PayScale. https://www.payscale.com/research/US/Employer=Twitter/Salary
Twitter, Inc. (2022). Quarterly report (Form 10-Q). SEC. https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/000141809122000070/twtr-20220930.htm
Twitter, Inc. (2022). Shareholder letter Q2 2022. Twitter, Inc. https://s22.q4cdn.com/826641620/files/doc_financials/2022/q2/Q2-2022-Shareholder-Letter.pdf
Musk's proactive cost-cutting initiatives, exemplified by a 50% reduction in the workforce of 7,500 former employees, provide a ray of hope. Given that the average salary for Twitter employees was $117,105 (2023), simple math indicates that the company will save approximately $439 million per year. To compare this number with their profits, we can review that Twitter’s has been sharply declining from $5.1 billion (2021) to $126 million in 1Q 2022 and further plummeted to $30 million in the 2Q. The scenario after the cost-cutting changes the panorama, as the significant savings amount provides a strong argument to believe that the company could be profitable by the end of 2024.
Furthermore, his expectation of potential positive cash flow starting in the second quarter of 2023 (thanks to the $13 billion loan in November), the fact that the platform has achieved its highest-ever daily user count of 253 million monetizable users and Musk's exceptional abilities in strategic decision-making support the idea of X's turnaround.
Despite challenges and the previous decline in revenue, the case for Musk's company's 2024 profitability appears stronger, supported by both data and Musk's skills.
https://www.ft.com/content/ccb40e03-099f-4bfe-ad34-2e6c3ec88c81
https://www.payscale.com/research/US/Employer=Twitter/Salary
@AndreaAlvarez I agree with your analysis. Social media companies like Meta (formerly Facebook) and X Corp. (formerly Twitter Inc.), primarily make money through selling advertising. An analysis on advertising can be done to examine whether X will be profitable. Since Musk bought the social media company last fall, the platform has struggled to retain advertisers. In a post to X in early September, he said ad revenue in the U.S. is still down 60%.However, CEO Linda Yaccarino Yaccarino stated that “from an Operating Cash Flow perspective, Twitter is at a breakeven point and is poised to reach profitability in early 2024. What’s even more encouraging is that 90% of the top 100 advertisers have returned to the platform, and in the past 12 weeks alone, about 1,500 have come back.” If it's true that advertisers have come back as this statement, X will be profitable.
