Some predicted an imminent death for Twitter. It’s still here. Can Elon Musk keep it alive?

Back in mid-November, with reports of hundreds of Twitter employees fleeing the troubled social media company, there was speculation that the lights would be turned off at the office of Elon Musk’s $44 billion acquisition.

But months later, Twitter has so far denied those who praised the company, and is moving forward while still facing significant challenges.

“I think it’s almost ‘crisis averted’ [situation]is the best thing I can say, from where we got to where we are,” said Wall Street technology analyst Daniel Ives.

However, Ives, who described the initial Twitter takeover period as an “absolute debacle,” also warned that “there was clearly a heavy burden.”

“It will be an uphill battle to get to where Musk wants to get to,” he said, but he is “slowly on the right path.”

However, Jasmine Enberg, an analyst at Insider Intelligence, offered a more pessimistic outlook for Musk. By the end of 2024, Twitter will reduce its monthly users worldwide by 32 million, his company has predicted.

“We do not expect a catastrophic event that ends Twitter, but rather a gradual erosion of the service that leads to a great loss in users,” he said. “And that’s what we see playing out now.”

Musk himself acknowledged the challenges he faced since buying the company in October last year. In a recent tweet, he admitted that the past few months have been “very difficult” which included saving Twitter from bankruptcy while balancing the task of running another company, Tesla Inc. and SpaceX.

“Wouldn’t want to hurt anyone,” he tweeted. “Twitter still has its challenges, but it’s trending now [break even] if we continue.”

Predicting the collapse of Twitter

Just a few months ago, after the resignation and firing of hundreds of Twitter workers, the headlines were about the end of Twitter.

“As Twitter workforce collapses, users tweet eulogies for the platform,” was one NPR headline.

“It’s strangely sad to lose Twitter,” Vox wrote.

In January, the Standard Media Index, which covers ad spending, reported that ad spending on Twitter Inc fell 71 percent in December. And 14 of Twitter’s top 30 advertisers stopped all advertising on the platform after Musk took over on October 27, according to Pathmatics estimates, Reuters reported

Twitter’s daily income is down 40% every year in January 2023, according to the technology newsletter Platformer, as reported by CNBC,

Meanwhile, Twitter has faced lawsuits, accused of not paying vendors. It also faces lawsuits over alleged failure to pay rent at its headquarters and California offices in London, England.

But last month, Twitter made its first interest payment of about $300 million on a $13 billion U.S. loan package to a group of banks, according to Reuters.

‘Not sad’ as he thought at first

It’s an important measure, Ives said, in terms of showing that Twitter is dealing with debt and “it’s not what it thinks it is.”

Ives also believes that there has been a stabilization in terms of fleeing advertisers, and that the cost cuts have had an impact.

The company has lost its trajectory from $ 1.5 billion to $ 2 billion loss, to a potential break-even position into the second half of the year, he said.

Twitter has introduced various initiatives to win back advertisers, offering some free ads, lifting the ban on political ads and allowing companies to control ad placement. Musk has also tried to increase revenue by launching Twitter’s verified blue check signature as a paid service.

“They need to increase subscription growth. Engagement has been strong on the platform since October, but now it’s about bringing advertisers and blue services that have proven success there,” Ives said.

On Saturday, a pop-up message warned Twitter users that they would lose the ability to secure their accounts via two-factor authentication text messages unless they paid $8 a month for a Twitter Blue subscription.

But generating revenue from users through premium subscriptions and memberships hasn’t worked with other social media companies, said Andy Wu, an assistant professor of business administration at Harvard Business School.

For example, in the case of WhatsApp, the plan was largely abandoned. For LinkedIn, premium memberships are not an important part of the business, Wu said.

“There are not many precedents to suggest that charging users in social network-based businesses is a viable path unless they make significant improvements in terms of the benefits that registered users will get,” Wu said.

He said Musk’s broader vision for the company — building Twitter into a public town square and an open forum for free speech — may not sit well with brand advertising. and generate revenue.

“Musk’s position on content moderation certainly has a negative impact on the interests of advertisers in the company. And Twitter is a company that is very dependent on brand advertisers who are sensitive to the environment in which their ads are placed.”

If indeed Twitter is trending, it’s because of cost-cutting and not because of the transformation of the company driven by Musk, Wu said.

Advertisers ‘don’t trust Musk’

Endberg said attracting advertisers is still a big challenge for Musk. Twitter has lost many of its trusted sales reps, so advertisers who still consider advertising on Twitter have no support, he said.

“I think the biggest problem right now for Twitter in terms of revenue is that advertisers don’t trust Musk,” he said. “I think the big picture here is that Musk gave us a reason to leave Twitter.”

Twitter’s relatively small user base means it hasn’t become an integral part of most advertising or marketing plans and has long been a platform that has underperformed relative to its social media peers, Endberg said.

“Advertisers are rethinking their commitment to Twitter. They’re cutting budgets,” he said.

“Because of all the controversy surrounding the deal, [Musk’s] The erratic behavior, as well as all the uncertainty and potential instability of the platform, I don’t think it’s a difficult decision for most advertisers to pause or pull ads from Twitter.

However, Musk is a generational entrepreneur who cannot be counted on, Wu said.

“He’s come from behind many, many times before and he’s come from the kind of business where he’s putting out $100 million worth of rockets a month,” Wu said, referring to Musk’s SpaceX rocket engineering company.

“I think, for someone who has to go through that kind of trial and error, this challenge for Musk is doable.