In his first speech to Twitter Inc. employees since buying the company for $44 billion, Elon Musk reportedly said that the company could go bankrupt if it doesn’t start making more money.
The warning came during Musk’s first two weeks as CEO of the social media company. In those two weeks, he fired half of Twitter’s staff, got rid of most of the top executives, and told the rest of the staff they couldn’t work from home anymore. People who know about the situation say that Yoel Roth and Robin Wheeler, two executives who were part of Musk’s new leadership team until today, are also leaving.
Even though the buyout took Twitter out of the public eye, Musk gave the company almost $13 billion in debt, which is now held by seven Wall Street banks that haven’t been able to sell it to investors.
Bloomberg News reported on Thursday that confidence in the company has dropped so quickly that, even before Musk’s comments about bankruptcy, some funds were offering to buy the loans for as little as 60 cents on the dollar. This is a price that is usually only offered to companies that are in financial trouble.
In his speech to the staff, Musk gave them a lot of bad news. People should be ready to work 80-hour weeks. There will be less free food and other perks at the office. And he ended the flexibility that let people work from home during the pandemic.
“If you don’t want to come, your resignation is fine,” he reportedly said, according to a person with knowledge of the situation.
Musk said, “We all need to be more hardcore” when asked about the possibility of attrition.
I’ve made the hard decision to leave Twitter. I’ve had the opportunity to work with amazing people and I’m so proud of the privacy, security, and IT teams and the work we’ve done.
I’m looking forward to figuring out what’s next, starting with my reviews for @USENIXSecurity 😁
— Lea Kissner (@LeaKissner) November 10, 2022
Musk talked about Twitter’s finances and plans for the future. He said that the company needed to move quickly to make its $8 subscription product, Twitter Blue, something that users will want to pay for. This is because advertisers are pulling back because they are worried about harmful content.
A person who knows how Musk runs his business says that he has tried to get people to work harder by saying they could lose their jobs. This person said that he is trying to say that if people don’t work hard, Twitter will be in a very bad place.
Musk’s bankruptcy statement was first reported by The Information and Platformer.
He also gave hints about products he’d like to make available, such as payments, ads that are more conversational, and checking accounts that pay interest. He said that getting started with the Twitter app should be easier than it is with TikTok.
Earlier on Thursday, Twitter’s chief information security officer, chief privacy officer, and chief compliance officer all quit, raising questions about the company’s ability to keep its platform safe and follow rules. Twitter is currently bound by a consent decree with the Federal Trade Commission that tells the company how to handle user data. If Twitter doesn’t follow the rules, the company could be fined.
Roth is now in charge of the social network’s Trust and Safety efforts, and Wheeler, a vice president of sales, is now in charge of dealing with advertisers who are worried.
One estimate says that the interest costs on the debt Twitter took on to pay for Musk’s buyout will rise to $1.2 billion a year.
Some advertisers have pulled out of the social network because they are worried about how Musk plans to moderate the content.
Investors in debt and people who rate credit are also not very confident. Banks for the company have been quietly asking hedge funds and other asset managers if they would be interested in buying some of the company’s debt.
People who know about the talks say that so far, they have been mostly about the $6.5 billion leveraged loan part of the financing. One of the people said that banks had seemed unwilling to sell for less than 70 cents on the dollar. Bloomberg’s calculations show that even at that level, the amount of money lost could be in the billions.
Moody’s Investors Service, on the other hand, recently lowered Twitter’s credit rating even more. The rating company said, “Twitter’s governance risk is very bad because Moody’s expects aggressive financial policies and Elon Musk to own most of the company.
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Musk sent an email to employees late Wednesday night warning them of “difficult times ahead” and saying that there was “no way to sugarcoat the message” about the company’s economic future. He stopped employees from working from home unless he approved it himself.
Musk Not Above Law, Says FTC
The Federal Trade Commission (FTC), which is a government agency, said it was watching Twitter with “deep concern.” “Musk is not above the law,” the FTC said.
Earlier, the FTC said that the company used personal information about its users to target ads. It agreed to pay $150 million at the end of May.
Executive Exodus Continues
A few other high-level executives left the company. After Musk bought the company and fired the CEO, CFO, and police chief, people started leaving. They are expected to get $122 million in severance pay.
Yeol Roth and Robin Wheeler are the most recent people to leave the company, a source close to the officials told Reuters. Lea Kissner, who was in charge of security for the company, also quit. The chief privacy officer and the chief complaint officer are also leaving.
Musk said last week that the company will cut its staff by half to save money. He also said that the company will charge $8 for verification and a blue tick.
