Elon Musk warns of Twitter bankruptcy and ends remote work

REUTERS/Brendan McDermid

Twitter Inc’s new owner Elon Musk on Thursday raised the possibility of the social media platform going bankrupt, capping a chaotic day that included a warning from a US privacy regulator and the exit of the company’s trust and safety leader.

The billionaire on his first mass call with employees said that he could not rule out bankruptcy, Bloomberg News reported, two weeks after buying it for $44 billion – a deal that credit experts say has left Twitter’s finances in a precarious position.

Earlier in the day, in his first company-wide email, Musk warned that Twitter would not be able to ‘survive the upcoming economic downturn’ if it fails to boost subscription revenue to offset falling advertising income, three people who have seen the message told Reuters.

The US Federal Trade Commission said it was watching Twitter with “deep concern” after the three privacy and compliance officers quit. These resignations potentially put Twitter at risk of violating regulatory orders.

In his first meeting with many employees at Twitter on Thursday afternoon, Musk warned that the company may lose billions of dollars next year, the Information reported.

Musk added in the email to workers that remote work would no longer be allowed and that they would be expected in the office for at least 40 hours per week.

Twitter, Musk and Spiro did not respond to requests for comment on a potential bankruptcy, the FTC warning, or the departures.

Musk ruthlessly moved to clean house after taking over on October 27 and has said the company was losing more than $4 million a day, largely because advertisers started fleeing once he took over.

Twitter has $13 billion in debt after the deal and faces interest payments totalling close to $1.2 billion in the next 12 months. The payments exceed Twitter’s most recently disclosed cash flow, which amounted to $1.1 billion as of the end of June.

Musk has begun charging $8 a month for the Twitter Blue service that will include a blue check verification.

End of Remote Work

Meanwhile, Musk in an email to Twitter employees said remote work would no longer be allowed and that they would be expected in office for at least 40 hours per week, Bloomberg News reported.

When Twitter re-opened offices in March, it had said employees could still work from home if they wanted.

Musk’s move reflects policies at his other companies, SpaceX and Tesla Inc, where he told employees to work in the office at least 40 hours a week, or leave.