Financial News
Musk Foresees The Bankruptcy Of Twitter As More Key Executives Leave
Elon Musk, the company’s new owner, said that Twitter Inc. might go bankrupt on Thursday, capping a hectic day that also saw the company’s head of trust and safety leave and a privacy regulator in the US issue a warning.
Two weeks after purchasing it for $44 billion, the billionaire indicated on his first conference call with staff that he could not rule out bankruptcy, according to Bloomberg News. Credit experts claim that this transaction has put Twitter’s finances in jeopardy.
Three people who have seen the message told Reuters that Musk earlier in the day warned Twitter that if it doesn’t increase subscription revenue to balance declining advertising revenues, it won’t be able to “survive the next economic collapse.”
According to Reuters, Yoel Roth, who oversaw Twitter’s efforts to tackle hate speech, false information, and spam on the service, quit on Thursday.
Roth identified himself as the company’s “Former Head of Trust & Safety” in his Twitter bio on Thursday.
Requests for comment from Roth went unanswered. His exit was initially reported by tech websites Platformer and Bloomberg.
Lea Kissner, Twitter’s chief information security officer, announced her resignation earlier on Thursday.
Damien Kieran, Twitter’s chief privacy officer, and Marianne Fogarty, its chief compliance officer, both submitted their resignations, according to an internal message posted on Thursday to Twitter’s Slack messaging platform and obtained by Reuters.
In contrast to earlier media reports that she too would be leaving, the business’s top ad sales executive, Robin Wheeler, assured staff in a memo that she was staying at the company.
Wheeler tweeted late on Thursday, “I’m still here.”
Following the departure of the three privacy and compliance officers, the US Federal Trade Commission declared that it was closely monitoring Twitter with “great concern.” Due to these resignations, Twitter may be in violation of legal requirements.
Alex Spiro, an attorney for Musk, informed certain employees via email late on Thursday that Twitter will continue to comply.
We had a productive conversation with the FTC today about our ongoing commitments, according to Spiro.
He said that only Twitter could be held accountable for disobeying orders, not specific employees.
“That is simply not how this works,” he wrote. “I realize that there have been people at Twitter who do not even work on the FTC subject stating that they may (go) to jail if we were not in compliance.
Musk warned that the business could lose billions of dollars in the upcoming year in his first meeting with several Twitter employees on Thursday afternoon, according to the Information.
Musk also stated that remote work will no longer be permitted and that employees would be required to spend at least 40 hours a week in the office.
Requests for comment on a prospective bankruptcy, the FTC warning, or the departures went unanswered by Twitter, Musk, and Spiro.
After assuming control on October 27, Musk brutally attempted to purge the organization and claimed that the company was losing more than $4 million every day, mostly as a result of sponsors leaving after he took charge.
After the deal, Twitter owes $13 billion in debt, with interest payments reaching around $1.2 billion over the following 12 months. The payouts are greater than Twitter’s most recent cash flow disclosure, which was $1.1 billion as of the end of June.
For the Twitter Blue service, which will have a blue check verification, Musk has started charging $8 per month.
WARNING
According to the FTC’s director of public affairs, Douglas Farrar, “We are closely monitoring recent developments at Twitter with serious worry.”
“Companies are required to abide by our consent decrees, and no CEO or firm is above the law. We are willing to employ the new instruments provided by our updated consent order to ensure compliance “said Farrar.
In May, Twitter agreed to pay $150 million to resolve FTC claims that it utilized users’ private information, such as phone numbers, for advertising purposes while claiming them the data was only gathered for security.
In an internal document published on Thursday, Twitter’s privacy lawyer noted that Spiro had claimed Musk was willing to take a “great amount of risk” with the business. The lawyer cited Spiro as stating, “Elon shoots rockets into space, he’s not afraid of the FTC.”
The acquisition of Twitter has raised worries that Musk, who frequently enters political discussions, may come under pressure from nations attempting to regulate online speech.
According to U.S. President Joe Biden, Musk’s “cooperation and/or technological partnerships with other countries is worthy of being looked at” on Wednesday.
Advertisers are not guaranteed
Speaking about Twitter’s Spaces feature on Wednesday, Musk said that his goal was to make the site a force for the truth and eliminate bogus accounts.
His assurances might not be sufficient.
In order to better understand the path the platform would take under its new leadership, Chipotle Mexican Grill said on Thursday that it had withdrawn its paid and owned content from Twitter.
It joined other companies, like as General Motors, that have suspended their Twitter advertising due to concerns that Musk will relax content management guidelines.
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