Social media already has a rap for being toxic. Tesla CEO and Twitter owner Elon Musk might make it expensive, too.
To make his latest acquisition profitable, Musk needs people to pay up for using Twitter. And his latest idea could make social media another bill to pay. In his payment plan, a single Tweet would cost 20.6 cents.
How so? Twitter Blue is the micro-messaging system's subscription model and it costs $8 per month. It allows users to get verified.
Twitter has 400 million active monthly users who send out 6,000 Tweets per second, or 15.552 billion Tweets a month. Divide that across 400 million monthly users paying $8 a month each and a Tweet could cost 20.6 cents. Is it worth 20.6 cents to share your five cents?
Musk, though, needs to fix Twitter's fundamentals.
After taking over the company, Musk last week laid off scores of employees to stem the cash burn. He noted that the company was losing a staggering $4 million a day soon after he took over.
Losses are only mounting. Twitter's main revenue is from advertisers that left in large numbers due in part to the uncertainty of the platform's future under Musk. But Wedbush analyst Dan Ives observes that Musk "can't cut his way to growth."
After Musk got the financing to buy Twitter, the company faces $1.2 billion in interest payments, higher than its cash flow at just $1.1. billion. Ratings agency Moody's has given Twitter a debt "junk" rating after Musk's leveraged buyout. The popular social media platform's revenue slipped from over $5 billion in 2021 to $1.1 billion in the second quarter this year, for an annualized run rate of $4.7 billion.
Twitter Blue Not Enough To Increase Cash Flow
Musk also announced that an updated subscription account would cost $8 per month. The new version of Twitter Blue was announced over the weekend. Earlier, the platform was available to businesses and celebrities. The new version will not be ad-free but will have half the number of ads and allow longer videos. It will also give users priority in replies, mentions and search.
Twitter Blue will also feature the iconic blue check mark, which shows the account has been verified. While earlier, this was available to businesses and celebrities, it will now be available to anyone at $7.99 a month.
Twitter Blue is now $4.99 a month. But if users want to keep their verified blue check mark, they will have to shell out an additional $3 a month. But the subscription platform may not be enough to make up for lost ad revenue.
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