Twitter Inc is drafting a plan for widespread layoffs, days after the social media platform was taken private by billionaire Elon Musk for $44 billion, according to people familiar with the matter.
One of the people said that the proposed layoffs are expected to dent the engineering position as well as impact other areas of the company. According to a disclosure earlier this year, Twitter has about 7,500 employees. The full scale of the deduction being discussed could not be determined.
Earlier this year, Twitter said it was exploring ways to cut costs because of the macroeconomic environment, according to a Securities and Exchange Commission filing in July, adding that there was a significant drop in hiring in the second quarter. . Social-media companies have faced market disruptions that have weighed on digital-ad spending this year, including rising inflation, fears of a recession and the war in Ukraine.
According to FactSet, Twitter has reported losses in eight of its last 10 financial years. The New York Times previously reported Twitter’s plans for job cuts at the company.
Mr Musk told employees in June that he believed the cost was “not a great situation” at Twitter, according to people watching a virtual meeting at the time. He did not rule out layoffs, saying whoever is a significant contributor should not worry, according to People.
Several employees have said they are concerned that Mr Musk could move to cut jobs before November 1, which is an implied date for Twitter’s compensation program. According to people familiar with the issue, the employees’ grant was expected to be paid in cash after Mr Musk was acquired. Several employees have said they are concerned that Mr Musk may try to avoid those payments if his employment ends before November 1.
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Musk-Twitter deal
WSJ financial editor Charles Forley and Alexa Corse, WSJ reporter covering Twitter, discuss the acquisition of Elon Musk on Twitter. What is the future for the platform? And what does the deal mean for Mr. Musk’s business empire?
According to an internal memo reviewed by the Wall Street Journal, before the deal closed, employees whose jobs were terminated generally expected to receive cash for the equity, which would last three days after leaving the company. were vested within the month, along with the remainder of their severance package.
As part of Mr Musk’s acquisition, Twitter added $13 billion in debt, which analysts say will add pressure to cut costs and boost revenue. Analysts estimate Twitter will be on the hook for annual interest payments of more than $1 billion, compared to some $51 million in 2021, based on terms already set out in documents related to the transaction. Twitter has posted average annual earnings before interest, taxes, depreciation and amortization of about $700 million over the past five years.
—Sarah E. Needleman contributed to this article.
write to Alexa Corse at [email protected]
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