Elon musk tells twitter employees, “bankruptcy is not out of the question”
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After recently laying off half of Twitter’s employees and on the same day that three of the company’s top security executives quit, the world’s wealthiest man reportedly told Twitter’s
remaining product team members that the company he just bought could see “net negative cash flow of several billion dollars” in 2023 and “bankruptcy is not out of the question” if that
happens. “We can’t scale to a billion users and take massive losses along the way, that’s not feasible,” Elon Musk said at a product team all hands today according to multiple reports.
However, he continued, “if you have a compelling product, people will buy it. That has been my experience at SpaceX and Tesla.” WATCH ON DEADLINE While comparing Twitter — a media technology
platform — to auto manufacturing or creating spacecraft for government and large corporate projects is not exactly apples to apples, Musk specified that his idea of “compelling” for the
social media company includes adding video content and bolstering compensation for content creators. Musk also stated plainly that the company needs to “bring in more cash than we spend.”
His $44 billion purchase of Twitter last month included $13 billion in debt which will reportedly incur interest payments of over $1 billion in the next year. According to Reuters, those
payments “exceed Twitter’s most recently disclosed cash flow, which amounted to $1.1 billion” as of June. Musk has said that he finished selling roughly the $7 billion in Tesla he needed to
fund the sale in August. But SEC filings indicated that he has sold nearly $4 billion more in Tesla stock in the two weeks since the Twitter deal closed. Speaking of federal agencies, Tesla
has a report due tomorrow to the FTC to remain in compliance with a 2011 settlement regarding its privacy practices. It is unclear how the resignation of Twitter’s three top security
officers today will impact that filing. “We are tracking recent developments at Twitter with deep concern,” F.T.C. spokesman Douglas Farrar said in a statement. “No C.E.O. 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.”