Elon Musk recently sent an email update to the staff of X:
Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.
I'm . . . impressed. Seriously. Sure, this is all pretty lousy, but I thought X was losing considerable sums of money. If they're genuinely breaking even they've exceeded my expectations.
The guy's a liar. I wouldn't be surprised if it's either making a fortune or losing money.
So as with Trump, when dealing with a Musk statement, especially about business, I suggest you follow the classic (via ChatGPT )
The puzzle is commonly known as the "Two Doors" or "Two Guardians" logic puzzle, often associated with the "Cretan liar paradox." Here's the classic scenario:
### The Setup:
- You are standing in front of two people (or two doors, each guarded by someone).
- One always tells the truth, and the other always lies, but you don’t know who is who.
- You are allowed to ask one question to determine the correct answer (e.g., which door leads to safety, or which person is truthful).
### The Solution:
You ask one of them this question:
**"If I were to ask the other person what they would say, what would their answer be?"**
### Explanation:
- If you ask the **truth-teller**, they will truthfully tell you what the liar would say.
- If you ask the **liar**, they will lie about what the truth-teller would say.
- In both cases, the answer you receive will be the wrong choice. Therefore, you can safely pick the opposite of their answer.
For example:
If you're trying to find the door to safety:
1. The truth-teller will truthfully report the liar’s false answer.
2. The liar will lie about the truth-teller’s true answer, effectively giving the same false answer.
3. Reverse the answer you’re given, and you’ll have the correct choice.
So "Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even." They are not breaking even.
Doesn't Twitter still have negative cash flow?
I wouldn't be shocked if they found a way to show some positive net income in their filings, but I'd be pretty surprised if Twitter has any real financial strength. It's hard to imagine why the banks would be selling off above-market loans otherwise.
It is likely X has negative total cash flow because of interest payments.
I don't see them having much depreciation or amortization and if they are losing money tax is not a major issue.
X's staff need to be focused on cash flow from operations to pay the interest on those loans and keep the lights on. They need substantial positive cash flow from operations to pay interest. Musk was almost certainly talking about cash flow from operations. I take no position on his truthfulness.
It's privately held so there are no securities filings, just filings to the IRS and there are no laws requiring hi to not bald faced lie to the public.
The thing with the company going private is, you don't know what's the truth, especially when it's coming from Musk.
In late 2023 the company had been saying that the company was cash-flow positive, with the qualifier being that it did not include debt servicing.* By May 2023, the company had already made a second $300M payment on the interest.** We already know that Musk used a $1B loan from his SpaceX to help pay for the acquisition which was returned with interest. ***
So where's he getting the money to make interest payments? Is the company cash flow positive after interest on debt payments? It is hard to believe the company can approach that point, even leaning heavily on subscriptions, given that the company doesn't even make Cloudflare's top-100 domains in the US, by amount of traffic.****
* - Slate
** - Bloomberg
*** - Reuters
**** - Cloudflare
I am skeptical of Cloudflare’s list
It also does not include YouTube and it includes a16z.com which is pretty niche.
I do not think it is anything close to a list of the most popular web sites and apps.
If Elon said it, it's probably a lie, or at least doing violence to the truth.
Shit floats.
Musk says that he reduced the employee count by 80% - for example, see here: https://www.cointribune.com/en/elon-musk-defends-cutting-80-of-xs-employees/
If that's true, then there is going to be much less innovation going forward, and minimal non-automated responses to bots, trolls, phishing, etc.. Maybe the current situation is stable, in terms of costs and revenues and number of active participants, or maybe not - time will tell.
If that's an accurate number, his employees have their hands full and then some for 18 hours a day just keeping up with his whims of the moment on top of completely routine traffic glitches and brushfires. It seems unlikely they'd have any capacity to handle more than ego-gratifying tweaks for him.
This seems like a fine opportunity to remind you that you could help out by dropping the Xitter share button and adding Bluesky.
I'd take that statement - which was in an employee memo, and not any kind of public filing - with a grain of salt the size of Lot's wife.
What this really is is leaked puffery as the big banks try to sell of their disastrous loans for the Twitter purchase at 90 cents on the dollar, while investment houses have already written down their stakes by 75%.