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Comment by hristov | Hacker News Reader

Good point. Also whenever Musk talks about making sacrifices to “make ends meet”, one should point out that Twitter was a perfectly profitable company with all those employees before the buyout.

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For some values of "perfectly profitable":

  Year   Net profit / loss ($mm)
  2012    -79
  2013   -645
  2014   -577
  2015   -521
  2016   -456
  2017   -108
  2018   1206
  2019   1466
  2020  -1136
  2021   -221

If you sum all of this, that's -1071 for those like me that were curious.

I get it that this is about profit. But to be fair, you have to factor in the valuation of the company to see if something was gained or lost in all those years.

Did I say something stupid because of the downvotes?

If a company chooses to reinvest the profit into the company, and therefore increases the valuation, it can be a gain, right? In that case no profit is made.

If you have $1 loss and gain $3 valuation, that's a gain of $2, right?

From an owner/investor perspective, you are correct. From the perspective of the corporate entity, you don't count valuation as profit/loss.

For example, Twitter didn't make 44B revenue this year on the sale and you won't see it on their budget. Stock holders made that money.

Same will be true again if Elon sells it for a profit or loss.

True, but when the corporate entity makes revenue, you basically decide to either keep it as a profit, or reinvest into the company itself. You would assume that reinvesting means the company is growing and so is worth more.

I get it that shares changing hands doesn't really change anything.

I think that is a faulty assumption, and maybe that is what you got some down votes.

A loss doesn't always mean reinvestment. Reinvestment doesn't always translate to growth. Growth doesn't always Translate to profitability or market value.

It is staggeringly common that businesses fail despite investment and despite growth. Sometimes the product is bad or simply has limited scalability.

Valuations can change rapidly based on expectations of future profit and market conditions. This is especially true in Tech and new companies where valuation is based on future potential and not current profitability.

The general idea is that even if you do a lot of reinvesting and grow your market cap significantly, that market cap can evaporate if it seems unlikely that a company will actually turn into the cash machine people hoped that it would.

Last full year (2021) was profitable if you ignore a massive one time shareholder litigation settlement payment. Usually one ignores these one time hits to evaluate the normal ongoing operation of the company.

As I said, for some (not-so-perfect) values of "perfectly profitable".

For the curious the impact on net income was 766 millions.

I would argue that settlement payments are an indicator of poor management, and unless something happens like a buyout then you can assume poor management will continue and there will continue to be risks of things like settlements.

Maybe, but if we're headed into a recession you can expect large cuts to advertising budgets

Was twitter "profitable"? https://fourweekmba.com/is-twitter-profitable/

Or do you mean, "They were on track to be profitable?"

Afaik, it had one profitable year after many years of loss.

Don't let reality get in the way of space man bad narrative

IIRC, Twitter was operating at a loss, prior to the closing of Elon's purchase.

See Q2 2022 Results here, net loss was $270 million -https://s22.q4cdn.com/826641620/files/doc_financials/2022/q2...

It's still an open question whether Twitter will succeed with Elon, but it definitely wasn't a healthy company prior to the purchase.

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