Musk warns of Twitter bankruptcy as more senior executives quit
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Twitter’s new owner Elon Musk warned that the company may lose billions of dollars next year.
PHOTO: REUTERS
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SAN FRANCISCO – Twitter’s new owner Elon Musk
The billionaire told Twitter employees on a call that he could not rule out bankruptcy, two weeks after buying it for US$44 billion (S$61 billion)
At Thursday’s meeting, Mr Musk warned employees that Twitter did not have the necessary cash to survive, said seven people familiar with the meeting.
The social media company was running a negative cash flow of several billion dollars, Mr Musk added, without specifying if that was an annual figure.
Mr Musk added that he had recently sold Tesla stock to “save” Twitter. He has sold nearly US$4 billion in Tesla shares recently, according to regulatory filings this week.
Even so, he said Twitter remained overstaffed after mass layoffs of half of the company’s 7,500 employees last week. Remaining workers needed to be more “hard core”, Mr Musk said.
Two executives, Mr Yoel Roth and Ms Robin Wheeler, who moderated a Twitter Spaces chat with Mr Musk on Wednesday as he tried to assuage advertisers’ concerns, have resigned, one person close to the matter said.
Ms Wheeler was the face of Twitter for advertising after Mr Musk took over.
Mr Roth, who was head of safety and integrity at the social media platform, has said Twitter had reduced views of harmful content in search results by 95 per cent compared with before Mr Musk’s acquisition.
Earlier on Thursday, Twitter’s chief security officer Lea Kissner tweeted that she had quit.
Chief privacy officer Damien Kieran and chief compliance officer Marianne Fogarty also resigned, according to an internal message posted on Twitter’s Slack messaging system on Thursday by an attorney on its privacy team.
The United States Federal Trade Commission (FTC) said it was watching Twitter with “deep concern” after these three privacy and compliance officers quit. These resignations potentially put Twitter at risk of violating regulatory orders.
Twitter, whose communications department has been laid off, did not respond to a request for comments on a potential bankruptcy, the FTC warning or the departures.
Mr Musk, who ruthlessly moved to clean house after taking over Twitter on Oct 27, has said the company was losing more than US$4 million a day, largely because advertisers started fleeing once he took over.
Mr Musk has saddled Twitter with US$13 billion in debt, on which it faces interest payments totalling close to US$1.2 billion in the next 12 months. The payments exceed Twitter’s most recently disclosed cash flow, which amounted to US$1.1 billion as at the end of June.
“We are tracking recent developments at Twitter with deep concern,” said Mr Douglas Farrar, the FTC’s director of public affairs.
“No CEO or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them,” Mr Farrar said.
In May, Twitter agreed to pay US$150 million to settle allegations by the FTC that it misused private information, like phone numbers, to target advertising to users after telling them the information was collected only for security reasons.
In the internal note cited above, the attorney mentioned hearing Twitter legal chief Alex Spiro say that Mr Musk was willing to take a “huge amount of risk” with Twitter. “Elon puts rockets into space, he is not afraid of the FTC,” the attorney quoted Mr Spiro as saying.
Twitter’s buyout has sparked concerns that Mr Musk, who has often waded into political debates, could face pressure from countries trying to control online speech.
It prompted US President Joe Biden to say on Wednesday that Mr Musk’s “cooperation and/or technical relationships with other countries is worthy of being looked at”.
Mr Musk told advertisers on Wednesday, speaking on Twitter’s Spaces feature, that he aimed to turn the platform into a force for truth and stop fake accounts.
His assurances may not be enough.
Chipotle Mexican Grill said on Thursday it had pulled back its paid and owned content on Twitter “while we gain a better understanding on the direction of the platform under its new leadership”.
It joined other brands, including General Motors, that have paused advertising on Twitter since Mr Musk took over, concerned that he will loosen content moderation rules.
Mr Musk sent his first e-mail to Twitter employees on Thursday, saying remote work would no longer be allowed, and that they would be expected in office for at least 40 hours a week. REUTERS, NEW YORK TIMES
