Musk Tells Staff Twitter Could Go Bankrupt Without Financial Turnaround, Reports Say

Topline

Twitter’s new owner Elon Musk told staff in an all-hands meeting Thursday the company has financial problems so serious that “bankruptcy is not out of the question” if it doesn’t start generating significantly more revenue, according to multiple reports, as the billionaire privately voices a grim outlook for Twitter’s future.

Tesla and SpaceX CEO Elon Musk listens to a question as he speaks at the SATELLITE Conference and … [+] Exhibition in Washington on March 9, 2020. (AP Photo/Susan Walsh)

Key Facts

Musk told employees at the company—which he bought two weeks ago after spending months trying to back out of his $44 billion acquisition deal—he expects Twitter will have a “net negative cash flow of several billion dollars” next year, according to the Information.

The comment comes after Musk said in his first company-wide email, “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” a message he sent to his workforce at 2:39 a.m. Eastern time Thursday.

Musk claimed last week that Twitter is losing more than $4 million per day, while he also tweeted it has “had a massive drop in revenue” due to companies pausing ad buys on Twitter, partly due to moderation concerns—a problem that only worsened Thursday with Chipotle pulling back on ads.

Tangent

Yoel Roth, who led Twitter’s trust and safety team and oversaw content moderation, resigned Thursday, according to multiple reports. Musk often pointed to Roth’s tweet threads explaining moderation policies as a way to reassure those concerned about the platform’s future.

Big Number

$18.5 billion. That’s how much debt Twitter now holds. Musk took on about $13 billion of it in loans from banks to finance his $44 billion deal to take over the platform.

Key Background

Musk has pinned his hopes on a subscription model to turn around Twitter’s financial woes, but the $8-per-month plan he’s offering for blue verified checkmarks likely won’t put much of a dent in the company’s debt payments. The pay-for-play model to get a verified check mark—previously reserved for accounts “notable in government, news, entertainment, or another designated category” has already caused problems with misinformation, while instances of hate speech on Twitter have risen significantly since Musk took over.

Contra

Musk claimed at an investor conference last week that he believes Twitter can become the most valuable company in the world.