Twitter under Musk’s reign could start with the elimination of around 75% of its staff.
No, it’s not a joke. The Washington Post reports, that Musk has informed potential investors his intent to sack almost 75% of Twitter’s staff once he is in charge of the micro-blogging site (which could be as soon as next week, provided the billionaire doesn’t have more dramatics up his sleeve). This mass layoff will affect around 5600 individuals currently working at Twitter, and if Musk has his way, the company will be left with just over 2000 employees – thus retaining a fraction of its total headcount.
It might be difficult for a bare skeleton crew to be in charge of operating one of the most popular social networking sites, especially at a time when adverse macroeconomic conditions have created an economic downturn and rising inflation in the market, making things tougher for companies across the globe.
And if Twitter struggles with just a quarter of its crew to keep things up and running (as well as fending off competitors), its rivals are ever-ready to pick up the pace and increase their social media market share. “A 75% headcount cut would indicate, at least out of the gates, stronger free cash flow and profitability, which would be attractive to investors looking to get in on the deal,” Dan Ives, an analyst at Wedbush, said. “That said, you can’t cut your way to growth.”
Of course, it is likely that it is another one of Musk’s publicity stunts, which he has whipped out before the deal with Twitter (hopefully) closes next week. The Musk-Twitter drama has been going on for months, and Musk has already hinted that he is not averse to buying the platform at a lower price than what he had initially offered – $54.20/share, which is still more than Twitter’s current share price of $52.44. At Tesla’s earnings call for the third quarter of the year, the billionaire even said that he was “obviously overpaying for Twitter,” but the long-term potential for the platform “is an order of magnitude greater than its current value.”
However, job cuts may not be entirely off the table. According to a report by the Washington Post, which cited interviews and documents that it had obtained, the management at Twitter intends to cut its payroll by $800 million by the end of 2023, which would represent a reduction of 25% in headcount. It seems that it also intends to clash funding to its infrastructure, including its data centers.
Laying off a quarter of the workforce is, however, vastly different from leaving no more than a quarter to continue working, and it might not happen in the first place. Thursday saw an internal note being circulated to Twitter employees that there were no plans for any company-wide layoffs and that its own “cost savings discussions” were put on hold until the deal with Musk is sealed.
Sean Edgett, Twitter’s General Counsel, further informed that they did not have any “confirmation of the buyer’s plans following close and recommend not following rumors or leaked documents but rather wait for facts from the buyer and us directly.”