Billion hole feared
Musk doesn’t rule out Twitter’s bankruptcy
11/11/2022 12:39 am
Elon Musk’s takeover of Twitter is becoming a debacle. In view of the lack of advertising income and high debts, the Tesla boss now believes it is possible that the platform will have to file for bankruptcy next year.
Almost two weeks after the $44 billion Twitter takeover, new owner Elon Musk is not ruling out the possibility of the online service becoming insolvent. According to media reports, during an appearance in front of employees, he warned that Twitter’s balance sheet could face a billion-dollar gap in the coming year. If, under these circumstances, it is not possible to bring in more money than we spend, “insolvency cannot be ruled out,” Musk quoted the financial service Bloomberg as well as the tech media “The Information” and “Platformer”.
Twitter was already in the red before the takeover. After the deal, Musk lamented a slump in sales because some major advertisers suspended ads on the platform. They worry that their ads could appear in a negative environment if Musk relaxes their content guidelines, as announced. The loan of around $ 13 billion that Musk took out for the purchase also weighs on Twitter. According to media reports, servicing this debt costs around one billion dollars a year.
The tech billionaire wants to supplement the advertising revenue, which has so far accounted for 90 percent of revenue, with a subscription business. The launch of his new subscription with a verification check mark initially caused chaos because some users imitated celebrities and companies with deceptively real-looking fake accounts.
No more working from home
Musk had already warned employees of difficult times in an email. The economic situation is “bad”, especially for a company that depends on advertising revenue. In the memo, Musk also announced new guidelines for working from home – in the future, working from home will only be permitted with his express personal permission. According to the memo, which the US media unanimously quoted from, employees must be in the office at least 40 hours a week. Before the takeover, Twitter’s employees were allowed to work from anywhere. Musk is considered an outspoken opponent of the home office trend, which he had already made clear at his electric car company Tesla.
Last week, Musk cut about every second of the approximately 7,500 jobs on Twitter. Now he said that the company still has too many employees. According to media reports, two other key executives left the company on Thursday: Yoel Roth, who was responsible for filtering out objectionable content, and Robin Wheeler, who was newly appointed to oversee advertiser relations.