After his takeover, Elon Musk wants to get Twitter back on track financially. Because the social media company is heavily in debt and has never really been profitable. According to a report, comprehensive layoffs should remedy the situation. Around 3,700 employees therefore have to fear for their jobs.
According to a media report, Elon Musk plans to cut more than half of the 7,000 jobs on Twitter. About 3,700 workers are to be laid off, reports the Bloomberg agency, citing people familiar with the matter. Musk will therefore inform the affected employees on Friday. The new owner of the short message service is also planning that all employees, with a few exceptions, should return to their jobs in the office.
Musk previously denied a Washington Post report that he plans to fire Twitter employees before November 1 to avoid stock option payments due that day. Twitter initially declined to comment.
Since the beginning of the year, Twitter has been looking for opportunities to make savings due to the overall economic environment. Hiring slowed significantly in the second quarter, according to a statement to the US Securities and Exchange Commission. Social media companies are feeling the effects of rising inflation, recession fears and the aftermath of the war in Ukraine in the form of falling advertising revenues this year.
Musk had already expressed in June that he did not think the cost situation at Twitter was good, as reported by people who followed a virtual meeting between the designated new owner and employees at the time. He didn’t rule out layoffs at the time, adding that anyone making a significant contribution to the company needn’t worry.
In the wake of Musk’s acquisition, Twitter has incurred $13 billion in debt, which analysts say will increase pressure to cut costs and boost revenue. Analysts estimate, based on terms previously set out in documents related to the transaction, that Twitter will have to pay more than $1 billion in annual interest payments, compared to about $51 million last year. Twitter has averaged about $700 million in annual earnings before interest, taxes, depreciation and amortization over the past five years.
