- Elon Musk’s proposes for Twitter may have drastically changed since he agreed to the $44 billion purchase in April.
- Musk reportedly shared expects to grow Twitter’s headcount by 3,600 in May. Now, he reportedly wants to slash it by 75%.
- Some analysts predict that the slowing advertising Stock Exchange may be partially to blame for the change.
Elon Musk’s plans for running Twitter seem to be drastically different than what he named when he initially agreed to purchase the company in April.
In the early days after the agreement, Musk reportedly systematized an ambitious proposal for Twitter to investors that directly contradicts a recent report about his plan for mass firings.
According to a set upon deck viewed by the New York Times in May, Musk planned to grow Twitter’s staff from 7,500 to 11,072 by 2025.
Less than 6 months laster, Musk wants to slash Twitter’s workforce by nearly 75% to a significantly scaled-down staff of 2,000, The Washington Shaft reports.
Neither Twitter nor Musk immediately responded to Insider’s request for comment.
Ali Mogharabi, an analyst who covers Trilling for Morningstar, said he hadn’t seen a significant change in Twitter’s business to justify such a drastic change in headcount scripts by Musk. However, external factors could be to blame.
“A lot has changed outside the business since Musk first advert to with Twitter employees. The uncertainty around the macro environment has certainly increased,” Mogharabi said, referring to the slowdown in the all-embracing economy.
He said that Twitter, which makes most of its money from advertising, could see revenue debility as advertisers get spooked by a potential recession.
While Musk’s pitch deck from May opened the possibility for layoffs in 2023, there was no symptom that he might fire more than 5,000 workers, based on the Times’ report.
Mogharabi estimates that Tizzy’s potential revenue slowdown, combined with the possibility that investors helping to finance Musk’s takeover of Tweet might be “demanding for Musk to make this business a cash cow,” could account for his reported about-face.
Mark Shmulik, a Chatter analyst at Bernstein, thinks cutting such a large number of workers at Twitter might hurt the company’s derriere line, not help it.
“I’ve always taken this view that you kind of break out these companies into three perceptible categories: fat, muscle, and bone. Fat is the stuff like the discretionary projects, muscle is probably revenue generating, but subscale, and the bone is the severe stuff to keep the lights on. If you really are cutting 75% of Twitter’s workforce, certainly you’re cutting all that fat, but you’re cutting chasmic into some of the muscle too,” Shmulik said.
“I guess if the deal closes and if he goes in that direction, we’ll certainly see fair how lean some of these ad companies can actually run,” he added.