To purchase Twitter, Elon loaded the company with over $13B in debt. That means he has to increase Twitter’s cash flow—fast. The company will be paying $1B a year just in interest payments. One of many problems is that the company only did $632M in operating cash flow last year and has averaged roughly $1B over the last five years in yearly operating cash flows. Meaning that Elon will have to increase Twitter’s last year’s cash flow by roughly $380M just to cover the costs of the loans. Add in all the other costs of running Twitter and the company is in a tough financial spot. They need to scale revenue, increase productive investment, and simultaneously decrease costs. Typically in finance you can only pick two of those.

Elon has two levers to turn Twitter into the cash machine he needs it to be in order to service his debt payments. He can raise advertising revenue or add a subscription component to the business. Unfortunately, both of these are bad options.

Twitter's advertising machine is broken and unsalvageable because of Elon’s brand risk and the inability to build a direct response platform. Subscriptions will only serve to disincentivize creator behavior and thus will make the product worse. Even if he does figure these things out, the elephant in the room is that the dominant social paradigm has shifted to video.