Wanted: Chief executive officer of a flailing tech company who will have no control over that company’s product or distribution. Hours: All. No free lunch. Must be willing to suffer public ridicule and disdain from the company’s owner.
It is not exactly the ad that is going to light up LinkedIn. But it is basically what Elon Musk is searching for in his quest for a new “Chief Twit.” Late Tuesday, Mr. Musk said that he will resign as CEO of the social network he bought barely two months ago “as soon as I find someone foolish enough to take the job!” He added that he still plans to run Twitter’s software and server teams.
Elon Musk, in other words, isn’t going anywhere. Finding a capable someone to take over a struggling business he has managed to impair further with a few months of erratic management would be hard enough. But as Mr. Musk himself points out, a new Twitter chief won’t even have control over vital aspects of the business.
And just how bad off is Twitter’s business now? In a Twitter Spaces conversation Tuesday evening, Mr. Musk claimed Twitter was on track to burn an annual $3 billion before he cut costs—a situation he likened to a high speed plane on fire spiraling toward the ground. A sharp drop in advertising has put the company on target for about $3 billion in revenue next year—43% below Twitter’s trailing 12-month revenue as of the end of June, before he completed his takeover. mr. Musk added that Twitter has a little more than 2,000 people left, which suggests three-quarters of the company’s staff members have either been laid off or quit this year.
In that context, Mr. Musk’s own question is apt. What kind of a leader, skilled enough to have a fighting chance at rescuing Twitter from its depths, would be foolish enough to hang himself by Mr. Musk’s puppet strings? Comforting approximately no one, Mr. Musk also said Tuesday that he now believes Twitter will be “OK” next year, potentially breaking even based on his recent changes.
Those changes include a launched, botched and relaunched Twitter Blue subscription program, carrying prices and features that seem in near-constant flux. Citing a software developer in Berlin, the New York Times reported last month that, as of Nov. 15, Twitter Blue had amassed just 140,000 subscribers. Even at the new premium price of $11 a year (if you sign up on IOS) and if you generously assume Blue has, say, doubled its subscribers in the weeks since, that amounts to just $3.3 million. How exactly that can help repay the $1 billion-plus in annual debt repayments raised to finance Mr. Musk’s purchase of the company amid a slowing advertising business will require nothing short of a wizard to work out.
Even if Twitter manages to score the right marionette and do “OK” next year, the bigger question for Mr. Musk is whether Tesla will be. Back in August, after stressing the importance of avoiding an “emergency” sale of Tesla stock should he be forced in court to go through with his purchase of Twitter, Mr. Musk sold millions of Tesla shares days after the acquisition closed. He then sold millions more Tesla shares last week.
Tesla’s stock has now shed 58% of its value since the day Mr. Musk announced his intention to buy Twitter. And much of that decline has come since early October, when Mr. Musk stopped trying to get out of the Twitter deal. In a tweet, Mr. Musk essentially blamed Tesla’s recent stock declines on the Federal Reserve, citing rising interest rates. But the Nasdaq and S&P 500 have only fallen 18% and 10%, respectively, since the Twitter deal was announced. Even Rivian, a money-losing, cash-burning electric-vehicle maker that barely started shipping vehicles last year and has since recalled most of them, is down only 37% in that time.
Without a publicly traded Twitter, Tesla’s stock has become the best barometer of how investors feel about Mr. Musk’s management of the microblogging service. Tesla shares slid 16% last week, when Twitter started banning journalists who shared publicly available information on the location of Mr. Musk’s private jet, or otherwise irked him in some way. Colin Rusch of Oppenheimer downgraded Tesla to a “perform” rating on Monday, reasoning that “increasing negative sentiment on Twitter could linger long term, limiting its financial performance and becoming an ongoing overhang on Tesla.”
mr. Musk has lost more than $100 billion in net worth this year thanks to Tesla’s stock slump alone. With Twitter’s fate now so tightly intertwined with Tesla’s, it is near impossible to imagine a show not run by Mr. Musk, no matter his official “role.” mr. Musk went to all the trouble to buy Twitter precisely to control it. Anyone who believes otherwise would be a fool, indeed.
Write to Laura Forman at [email protected] and Dan Gallagher at [email protected]
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