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HomeBusiness & TechLayoffs May Loom at Elon Musk's Twitter, Analysts Say

Layoffs May Loom at Elon Musk’s Twitter, Analysts Say

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Layoffs May Loom at Elon Musk's Twitter, Analysts Say

One analyst predicts Musk might lay off 20% of Twitter’s workforce, as the company is still not profitable every quarter, and interest rates could rise on the borrowed money he’s using to finance the deal.

Opinions on what Elon Musk will do with Twitter are like assholes who bother you on Twitter  — everybody’s got one.  And while the deal will still take another three to six months to close, many of these opinions and predictions relate to the culture-war issues in which Musk revels — essentially whether he will let Trump back on, or whether he will move the company headquarters to Austin. Musk’s own cryptic proclamations have declared he would “defeat the spam bots” and “authenticate all real humans,” which is basically just vague, billionaire-inheritee shit-talking.

Financial analysts look at this differently. The San Francisco Business Times reports on financial problems and possibly layoffs at Twitter in the Elon Musk era, pointing out that “interest rates could rise on the $21 billion in cash Musk” is borrowing to finance the $44 billion deal, and that “ad sales could slump in the turbulence surrounding the acquisition.”

The most dire warning is that Musk might lay off as much as 20% of Twitter’s 7,500-employee global workforce.

“Given the amount of debt he is taking on in the acquisition, Musk will have a big incentive to lift Twitter’s profits as fast as possible,” the Business Times quote’s The Information’s Martin Peers as saying. “That almost certainly means shrinking Twitter’s workforce, perhaps by as much as 10% to 20%.”

This is just one analyst’s opinion, and taken from a paywall-protected op-ed article. But it does take into account some under-appreciated variables. Only about 20% of U.S. adults are even on Twitter, and the thing has been a money-losing machine for the majority of its 15-plus year existence.

Twitter has had only two profitable years (2018 and 2019) during that existence, and in both of these years, eked out barely $1 billion in profits. The company had a good couple of quarters last year, but took a loss of $181.7 million at the end of 2021, according to their last quarterly earnings call. Twitter commands a great deal of attention in the public sphere, but its the success of its business model (and its real-world relevance) are debatable.

But hey, Elon is the world’s richest man, what does he care? Forbes’ real-time billionaire tracker has him some $80 billion ahead of No. 2 Jeff Bezos.  If Musk is putting up half of that $44 billion himself, he’s still ahead.

But Twitter’s workforce could end up being biggest loser, when all is said and done.

Related: Elon Musk Buys a Nearly 10% Stake in Twitter, What Could Go Wrong? [SFist]

Image: Maurizio Pesce via Wikimedia Commons

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