Twitter Debt Expected to Increase by 18 Trillion Won Due to Musk Acquisition... Annual Interest Alone 1.4 Trillion Won

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] It is forecasted that if Elon Musk, CEO of Tesla, acquires the social networking service (SNS) Twitter, Twitter's debt will increase by more than 18 trillion won, resulting in annual interest expenses exceeding 1.4 trillion won.

On the 24th (local time), the Wall Street Journal (WSJ), based on analyst analysis, evaluated that if the contract for Twitter to be acquired by CEO Musk is finalized, Twitter's debt will increase by about $13 billion (approximately 18.7 trillion won). Accordingly, interest expenses are estimated to expand to over $1 billion annually. Twitter paid $51 million in interest expenses last year.

Twitter reported an average annual pre-tax revenue of about $700 million over the past five years. Regarding this, Jordan Kalpin, senior analyst at bond research firm CreditSights, said this means Twitter needs to find ways to increase sales and expand profit margins, analyzing that "a massive amount of cash will need to be used."

The problem is that the advertising market for SNS is freezing due to recession concerns. Advertising accounts for more than 90% of Twitter's revenue in the second quarter, indicating a high dependence on the advertising market. WSJ reported that CEO Musk has indicated his intention to improve the excessive reliance on advertising if he acquires Twitter.

Some analysts expect that CEO Musk could invigorate Twitter's business aspects, but they also foresee that there will be turbulent changes during this process, which may take several years. Analyst Kalpin stated, "Considering the massive interest burden, additional funds will likely be needed over the next two years."

Given this situation, there are also forecasts that layoffs will continue once CEO Musk's acquisition of Twitter is finalized. As of early this year, Twitter had about 7,500 employees. On the 20th, The Washington Post (WP), citing documents obtained independently and interviews, reported that CEO Musk revealed plans to investors to lay off 75% of Twitter's employees after the acquisition, reducing the workforce to around 2,000.

This content was produced with the assistance of AI translation services.