Elon Musk warns 'Twitter bankruptcy possible' if cash burn lingers
The warning came amid a tumultuous start to Musk’s reign at the social media company a two-week period in which he has fired half of Twitter’s staff
Elon Musk, in his first address to Twitter Inc. employees since purchasing the company for $44 billion, said that bankruptcy was a possibility if it doesn't start generating more cash, according to people familiar with the matter.
The warning came amid a tumultuous start to Musk's reign at the social media company a two-week period in which he has fired half of Twitter's staff, ushered out most of the top executives and ordered the remaining employees to stop working from home.
One executive who until Thursday had emerged as part of Musk's new leadership team, Yoel Roth, departed, people familiar with the situation said.
Another, Robin Wheeler, also resigned but Musk persuaded her to stay on, said some of the people, who requested anonymity to protect personal and professional relationships.
While the buyout has removed Twitter from the scrutiny of public markets, Musk loaded the company with almost $13 billion of debt that's now in the hands of seven Wall Street banks that have been unable to offload it to investors.
Confidence in the company has eroded so rapidly that, even before Musk's bankruptcy comments, some funds were offering to buy the loans for as little as 60 cents on the dollar a price typically reserved for companies deemed in financial distress, Bloomberg News reported on Thursday.
In his address to staff, Musk issued multiple dour warnings. Employees should brace for 80-hour work weeks.
There will be fewer office perks like free food. And he ended the pandemic-era flexibility that allowed employees to work from home.
In discussing Twitter's finances and future, Musk said the company needed to move with urgency to make its $8 subscription product, Twitter Blue, something users will want to pay for, given a pullback by advertisers who are concerned about harmful content.
Musk has in the past used the threat of financial ruin in an attempt to motivate workers, according to a person familiar with his management style.
He's trying to convey the notion that if people don't work hard, Twitter will be left in a very difficult spot, this person said.
The Information and Platformer earlier reported Musk's bankruptcy statement.
He also hinted at products he'd like to introduce, including payments, ads that are more conversational and interest-bearing checking accounts.
Onboarding to the Twitter app should be smoother, as is the case with TikTok, he said.