Twitter is expected to make massive layoffs in the coming months, a media outlet said, citing people familiar with the matter. Elon Musk told potential investors in the deal to buy Twitter that he plans to lay off nearly 75 percent of the company’s 7,500 employees, people familiar with the matter said. During Tesla’s third-quarter earnings call on Wednesday, Elon Musk said he had given too much to Twitter.
"While it is clear that myself and other investors are now clearly overpaying for Twitter, in my opinion, Twitter's long-term potential is an order of magnitude higher than its current value."
According to media reports, Twitter management plans to cut its payroll by $800 million by the end of 2023, which would mean a 25 percent reduction in the number of employees.
In a June question-and-answer session with Twitter employees, Elon Musk said he needed to “rationalize headcount” and said.
"Any employee who makes a significant contribution to Twitter should have nothing to worry about."
However, Elon Musk’s statement at the time came before he tried to back out of the deal in early July and Twitter subsequently sued him, seeking to enforce the terms of the merger agreement. Elon Musk apparently changed course after realizing that he might lose a legal battle with Twitter.
This is not the first time Elon Musk has mentioned that he will make significant layoffs following the Twitter acquisition.
Back in May this year, there were media reports that Elon Musk was planning to make about 1,000 job cuts at Twitter at that time. At the time, Elon Musk also announced plans to increase Twitter’s total workforce to more than 11,000 by 2025.
According to Statista, Twitter started with eight employees in 2008, a year later that number grew to 29, then increased significantly to 130 in early 2010, then more than doubled to 350 in January 2011. By December 2013, Twitter had 2,712 employees. Over the past decade, Twitter’s workforce has grown steadily, with a few declines. at the end of 2020, Twitter had 5,500 employees, and at the end of last year, the latest statistics put the company’s employee count at 7,500.
Despite steady employee growth, Twitter’s staff size is much smaller than Facebook’s. In December 2021, Facebook had 71,970 full-time employees, compared to 150 in 2006. Amazon, on the other hand, already employs more than 1.6 million people.
Layoffs are common during corporate mergers and restructuring. But Elon Musk’s current acquisition of Twitter remains uncertain, which may seem “too blunt.
Rob Enderle, a technology industry analyst at the Enderle Group, said.
"Announcing layoffs before your due diligence is complete is usually bad form, mainly because the new owner doesn't know what he or she has until it's complete and therefore can't determine if they are understaffed or overstaffed."
Elon Musk’s occasional signals of layoffs can make Twitter employees jittery, and many of them may choose to jump ship.
Some analysts also say that Elon Musk may not know the inner workings of Twitter like the back of his hand, and that it would be difficult for him to make precise judgments about such a content social media platform company based on his own experience.
Elon Musk has said he aims to increase Twitter’s annual revenue to $26.4 billion by 2028, up from $5 billion last year. In his plan, the share of advertising revenue, which currently accounts for about 90 percent of Twitter’s revenue, will drop to about 45 percent, while paid content will contribute about $10 billion in annual revenue.
Jim Purtilo, associate professor of computer science at the University of Maryland, observes.
"I don't know if 7,500 employees is just right for Twitter. However, few companies like to use the number of employees as a basis for comparison. Compared to other tech companies, Twitter is inherently more unique. Many of these employees may handle content review, others may sell ads, whether more or less, we don't know. There may be some redundancy, but what are Twitter's goals for the future? Will adjusting the number and structure of its staff increase its profitability? These are the things that the market will have to watch. I think the ultimate driver of staffing adjustments will be the expectation of profitability."
