7 ms·

Losing 200 million a year and mostly being not profitable is viable? Edited to say "mostly" not profitable.

by jsonne 4y ago

stefan_ 4y ago
No, having enough cash in the bank to continue on for another 10 years (as Twitter did) is viable. Viable is not "making profits".
suprfsat 4y ago
They certainly could do worse.
- _jal 4y ago
  Like owing $1B/year in interest?
  - dragontamer 4y ago
    Anyone got real numbers for the debt? Grade CCC bonds are well above 16% these days, and the amount of debt is $13 Billion. This very well could be $2 Billion/year interest payments. I remember reading rumors of ~10% since the debt was signed in April 2020 and rumored to be 50% fixed and 50% adjustable. But I never actually found the real information or confirmation. I think it's safe to say that the interest payment is somewhere between $1 and $2 billion, but there is also principal that needs to be paid back, right? ----- That's not counting whatever debt Elon did to get his $33 Billion portion of the bill. I'm just looking at Twitters debt they now owe Morgan Stanley (and a few other banks) as part of the $13 Billion leveraged buyout portion of this company purchase.
    - rockinghigh 4y ago
      > Last year, Twitter’s interest expense was about $50 million. With the new debt taken on in the deal, that will now balloon to about $1 billion a year. https://www.nytimes.com/2022/10/30/technology/elon-musk-twitter-debt.html https://www.nytimes.com/2022/10/30/technology/elon-musk-twit...
PubliusMI 4y ago
Imnimo 4y ago
Didn't Twitter post like a billion in profits in 2019?
- sigmar 4y ago
  yea, and profit in 2018. 5 billion revenue in 2021 with a 200 million loss.
- carbonx 4y ago
  Best info I can find is that they were only ever profitable in 2018 and 2019.
fbdab103 4y ago
Amazon went 14 years before posting a profit. Not that I think Twitter was necessarily investing revenue correctly, but a business can go pretty far even in the red.
- YetAnotherNick 4y ago
  Because Amazon was spending on R and D. AWS came as a result of that. Amazon's core business was known to overspend(still do) just for customer's satisfaction, and it was very clear Amazon could turn into profit any day they want. Same is not the case for Twitter.
  - kevinh 4y ago
    Twitter spent more than a billion dollars on R&D in 2021, which more than eclipsed its net loss.
    - yazaddaruvala 4y ago
      Difference is Amazon spent a lot of it on durable infrastructure (datacenters, servers, fulfillment centers). I don't know how Twitter spent its money, but seemingly on undifferentiated software (i.e. not durable) or moderation? Both of which are recurring expenses.
- wongarsu 4y ago
  The difference is that Amazon made plenty of cash, and chose to reinvest all of it. For nearly all of those 14 years they could have just decided to be profitable, if it had been advantageous to do so. I don't think Twitter is in the same position at all
_jal 4y ago
I think it is fair to say that left to its own devices (that is, pretend the last year of disruption and then this hadn't happened), Twitter could have become profitable enough to muddle on. Everyone knew they had too many employees, and that big money-making possibilities... don't seem to be there, due to the nature of the niche they've carved. But they had a lot of money in the bank, so they didn't need to make any sudden movements. Sensible downsizing and incremental improvement of the bottom line, and, yeah, that's a viable business. It may not be super exciting, but if you want exciting, head south on 101, Meta is about 40 minutes out depending on time of day.
- type-r 4y ago
  16 years isn't enough time to figure out a profitable business strategy? How much longer would you have given them?
  - ClumsyPilot 4y ago
    Business thats covering its costs doesn't need anyone to give them anything. They just have to survive. They were surviving. They could turn no profit in a hundred years, and thats fine.
    - type-r 4y ago
      A business that does not turn a profit pretty explicitly does need people to give them money though right?
      - ClumsyPilot 4y ago
        it can be cash neutral
      - deleted 4y ago
        [deleted]
Whatarethese 4y ago
Tesla historically has not been profitable until recently and they are getting help from carbon credits.

Losing 200 million a year and mostly being not profitable is viable? Edited to say "mostly" not profitable.

by jsonne 4y ago

Losing 200 million a year and mostly being not profitable is viable? Edited to say "mostly" not profitable.

No, having enough cash in the bank to continue on for another 10 years (as Twitter did) is viable. Viable is not "making profits".

suprfsat 4y ago

They certainly could do worse.

_jal 4y ago
Like owing $1B/year in interest?
- dragontamer 4y ago
  Anyone got real numbers for the debt? Grade CCC bonds are well above 16% these days, and the amount of debt is $13 Billion. This very well could be $2 Billion/year interest payments. I remember reading rumors of ~10% since the debt was signed in April 2020 and rumored to be 50% fixed and 50% adjustable. But I never actually found the real information or confirmation. I think it's safe to say that the interest payment is somewhere between $1 and $2 billion, but there is also principal that needs to be paid back, right? ----- That's not counting whatever debt Elon did to get his $33 Billion portion of the bill. I'm just looking at Twitters debt they now owe Morgan Stanley (and a few other banks) as part of the $13 Billion leveraged buyout portion of this company purchase.
  - rockinghigh 4y ago
    > Last year, Twitter’s interest expense was about $50 million. With the new debt taken on in the deal, that will now balloon to about $1 billion a year. https://www.nytimes.com/2022/10/30/technology/elon-musk-twitter-debt.html https://www.nytimes.com/2022/10/30/technology/elon-musk-twit...

PubliusMI 4y ago

Imnimo 4y ago

Didn't Twitter post like a billion in profits in 2019?

sigmar 4y ago
yea, and profit in 2018. 5 billion revenue in 2021 with a 200 million loss.
carbonx 4y ago
Best info I can find is that they were only ever profitable in 2018 and 2019.

fbdab103 4y ago

Amazon went 14 years before posting a profit. Not that I think Twitter was necessarily investing revenue correctly, but a business can go pretty far even in the red.

YetAnotherNick 4y ago
Because Amazon was spending on R and D. AWS came as a result of that. Amazon's core business was known to overspend(still do) just for customer's satisfaction, and it was very clear Amazon could turn into profit any day they want. Same is not the case for Twitter.
- kevinh 4y ago
  Twitter spent more than a billion dollars on R&D in 2021, which more than eclipsed its net loss.
  - yazaddaruvala 4y ago
    Difference is Amazon spent a lot of it on durable infrastructure (datacenters, servers, fulfillment centers). I don't know how Twitter spent its money, but seemingly on undifferentiated software (i.e. not durable) or moderation? Both of which are recurring expenses.
wongarsu 4y ago
The difference is that Amazon made plenty of cash, and chose to reinvest all of it. For nearly all of those 14 years they could have just decided to be profitable, if it had been advantageous to do so. I don't think Twitter is in the same position at all

_jal 4y ago

I think it is fair to say that left to its own devices (that is, pretend the last year of disruption and then this hadn't happened), Twitter could have become profitable enough to muddle on. Everyone knew they had too many employees, and that big money-making possibilities... don't seem to be there, due to the nature of the niche they've carved. But they had a lot of money in the bank, so they didn't need to make any sudden movements. Sensible downsizing and incremental improvement of the bottom line, and, yeah, that's a viable business. It may not be super exciting, but if you want exciting, head south on 101, Meta is about 40 minutes out depending on time of day.

type-r 4y ago
16 years isn't enough time to figure out a profitable business strategy? How much longer would you have given them?
- ClumsyPilot 4y ago
  Business thats covering its costs doesn't need anyone to give them anything. They just have to survive. They were surviving. They could turn no profit in a hundred years, and thats fine.
  - type-r 4y ago
    A business that does not turn a profit pretty explicitly does need people to give them money though right?
    - ClumsyPilot 4y ago
      it can be cash neutral
    - deleted 4y ago
      [deleted]

Whatarethese 4y ago

Tesla historically has not been profitable until recently and they are getting help from carbon credits.