Debt servicing: Prior to Elon, Twitter's debt servicing was $50m. That is now $1.2B/year. That is a new cost.
1% of MAU converted. This seems generous. The most likely market for twitter subscriptions are those that post regularly. Twitter has 450m MAU, but only 250m daily users. Furthermore, 95% of twitter content comes from just 25% of its user base. Giving you a far smaller acquisition pool. Thus, 1% of MAU seem unlikely. YouTube Red has been around for 7 years, and has barely cracked 2.5%. It's worth noting that Twitter Blue users will also see 50% less advertising, further eroding your advertising revenue. Let's get to that.
Your assumption that ad revenue would drop 50% is worth examining. Last week NPR reported 50% of twitter's 100 biggest advertisers have already left. Maybe you think that's rock bottom. I doubt that (lest we forget that the prank tweet about Elli Lilly cut $15B off their market cap - we are not talking brand safety, we are talking serious business damage), but let's leave that there.
Employee layoffs. While Elon has fired 3700 employees in the last month, he has stated he eventually intends to hire over 11k. While this target sits alongside other gaudy ambitions, his vision is not for a low head count operation. There is currently a class action lawsuit for wrongful dismissal, and certainly more brewing. Now, that'll take a while to shake out, but with stricter employment laws in Europe, Twitter will be dragged through the courts for years before it fully enjoys the full savings from hiring less people.
Speaking of Europe, Germany's NetzDG laws allow for fines of up to €50 million for failures to comply with reports to takedown illegal hate speech. Again, lax moderation is far bigger than a brand safety issue. The incoming and ongoing fines from broader GDPR legislation Twitter faces due to their haphazard moderation will be a significant cost over the next decade, particularly if Elon continues with his obsession with "Free Speech", and the restoration of previously banned accounts.
Finally, Twitter can no longer be considered in isolation. Tesla's stock is down 58% since Elon announced his twitter purchase. That personally cost him $100B. That's not entirely due to Twitter, but it's related. Which puts the quibbling over a few $100m into perspective. In summary, how much money can Elon handle losing, before he cuts a losing bet?
IMHO, you're overlooking a few things.
Debt servicing: Prior to Elon, Twitter's debt servicing was $50m. That is now $1.2B/year. That is a new cost.
1% of MAU converted. This seems generous. The most likely market for twitter subscriptions are those that post regularly. Twitter has 450m MAU, but only 250m daily users. Furthermore, 95% of twitter content comes from just 25% of its user base. Giving you a far smaller acquisition pool. Thus, 1% of MAU seem unlikely. YouTube Red has been around for 7 years, and has barely cracked 2.5%. It's worth noting that Twitter Blue users will also see 50% less advertising, further eroding your advertising revenue. Let's get to that.
Your assumption that ad revenue would drop 50% is worth examining. Last week NPR reported 50% of twitter's 100 biggest advertisers have already left. Maybe you think that's rock bottom. I doubt that (lest we forget that the prank tweet about Elli Lilly cut $15B off their market cap - we are not talking brand safety, we are talking serious business damage), but let's leave that there.
Employee layoffs. While Elon has fired 3700 employees in the last month, he has stated he eventually intends to hire over 11k. While this target sits alongside other gaudy ambitions, his vision is not for a low head count operation. There is currently a class action lawsuit for wrongful dismissal, and certainly more brewing. Now, that'll take a while to shake out, but with stricter employment laws in Europe, Twitter will be dragged through the courts for years before it fully enjoys the full savings from hiring less people.
Speaking of Europe, Germany's NetzDG laws allow for fines of up to €50 million for failures to comply with reports to takedown illegal hate speech. Again, lax moderation is far bigger than a brand safety issue. The incoming and ongoing fines from broader GDPR legislation Twitter faces due to their haphazard moderation will be a significant cost over the next decade, particularly if Elon continues with his obsession with "Free Speech", and the restoration of previously banned accounts.
Finally, Twitter can no longer be considered in isolation. Tesla's stock is down 58% since Elon announced his twitter purchase. That personally cost him $100B. That's not entirely due to Twitter, but it's related. Which puts the quibbling over a few $100m into perspective. In summary, how much money can Elon handle losing, before he cuts a losing bet?
But like, fun thought experiment.