Twitter may face bankruptcy, Elon Musk warns employees: Report

Twitter is the facing the threat of bankruptcy, the social media platform’s new owner Elon Musk has raised this possibility. Musk told Twitter employees on a call that he could not rule out bankruptcy, Bloomberg News reported.

In his first meeting with all employees at Twitter on Thursday, Musk warned that the company may lose billions of dollars next year, the report said.

Aftereffects of Musk deal

Musk has said the company was losing more than $4 million a day, largely because advertisers started fleeing once he took over.

Also read: Twitter job cuts: What are digital layoffs, and how can employees cope?

The billionaire’s $44-billion deal to buy Twitter has reportedly put the company’s finances in a precarious position.

Musk has saddled Twitter with $13 billion in debt, on which it 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, a Reuters report said.

After Musk took over, he announced plans to cut the workforce by half. After the takeover, Twitter has also started charging $8 a month for the Twitter Blue service that includes a blue check verification. Musk also promised to stop fake accounts.

Resignations worry FTC

A number of high-profile resignations from the company – including reportedly of Yoel Roth and Robin Wheeler who moderated a Twitter Spaces chat with Musk on Wednesday as he tried to assuage advertisers’ concerns – have also raised concerns.

Twitter’s Chief Security Officer Lea Kissner tweeted on Thursday that she had quit and according to the Reuters report, Chief Privacy Officer Damien Kieran and Chief Compliance Officer Marianne Fogarty too have also resigned.

The US Federal Trade Commission (FTC) expressed “deep concern” at these resignations as it potentially puts Twitter at risk of violating regulatory orders.

Twitter did not respond to requests for comment on a potential bankruptcy, the FTC warning, or the departures, the report said.

In May, Twitter had agreed to pay $150 million to settle allegations by the FTC that it had misused private information, like phone numbers, to target advertising to users.

Advertisers pull back

On Wednesday, Musk had told advertisers that he aimed to turn the platform into a force for truth and stop fake accounts. But it seemed to have not much impact as Chipotle Mexican Grill on Thursday pulled back its paid and owned content from the social media platform till “we gain a better understanding on the direction of the platform under its new leadership.”

Also read: Twitter scraps ‘Official’ label soon after launch; Elon Musk says ‘I just killed it’

General Motors had earlier paused advertising on Twitter since Musk took over, concerned that he will loosen content moderation rules.

Meanwhile, Musk sent his first email to Twitter employees on Thursday, saying remote work would no longer be allowed and that they would be expected in office for at least 40 hours per week, according to Bloomberg News.