Elon Musk's Twitter has not been paying rent on its offices in a bid to cut costs: Report

Elon Musk purchased Twitter for $44 billion, an acquisition that was widely considered an overleveraged purchase. Overleveraged purchase refers to a situation where an individual or business has purchased an asset using a significant amount of borrowed money, resulting in a high level of debt relative to the value of the asset. This can be a risky situation, as the individual or business may have difficulty making the required debt payments if the value of the asset does not increase or if they are unable to generate sufficient income from the asset. 

In some cases, overleveraged purchases can lead to financial difficulties or even bankruptcy. In this case, the asset is Twitter, and Elon Musk will be in a less than ideal position if Twitter does not start generating sufficient revenues. Since Musk took over, he made several decisions to cut costs to the company, one of which was firing half of the staff. But apparently that isn't all he has done to cut costs. A report from the New York Times claims that Twitter has not been paying rent on its offices for weeks. 

Owner of the office space is waiting for rent

The report talks about two specific offices -- the Twitter HQ at San Francisco and Twitter's global office. These office spaces are owned by real estate firm Shorenstein. Twitter is reportedly receiving complaints from Shorenstein, asking the firm to pay the rent. Musk's Twitter is apparently trying to renegotiate the terms of the lease. Musk has also received some criticism for creating bedrooms in the Twitter HQ. Twitter, as a company, has seldom been profitable. Musk's challenge is now turning the social media app into a profitable company. 

Twitter's business model 

Musk is relying on the subscription model for revenues, a model which Amazon prime and Netflix use. Until now, Twitter's main source of revenue were advertisers. The company's business model is based on generating advertising revenue. Advertisers pay Twitter to promote their content to users, and the company earns revenue from these promotions. Twitter also offers additional services, such as data analytics and customer service tools, to businesses and organisations that use the platform to connect with their customers and audiences.