Elon Musk says Twitter has had massive revenue drop

New owner blames ‘activists groups’ for driving advertisers away, as half of all Twitter staff are let go in sweeping lay-offs | WATCH HIS SPEECH

Twitter Inc. has suffered “a massive drop in revenue” because of advertisers cutting back on using the social-media platform, new owner Elon Musk said Friday, as the company started sweeping lay-offs just over a week after the billionaire took it over.

Mr. Musk in a tweet Friday, while Twitter was notifying about half its staff they were being let go, blamed the cutback in advertising on “activist groups pressuring advertisers.” He said that the company hadn’t changed content moderation and had tried to address activists’ concerns. “Extremely messed up!” he said, casting the pullback as an assault on free speech.

Mr. Musk’s remarks came after several big-name advertisers, including food company General Mills Inc., Oreo maker Mondelez International Inc., Pfizer Inc. and others have temporarily paused their Twitter advertising in the wake of the takeover of the company by Mr. Musk, The Wall Street Journal has reported. German car-making giant Volkswagen AG said it had recommended to its various brands they pause advertising on Twitter to assess any revisions the company makes to its brand safety guidelines.

Mr. Musk’s tweet comes after Twitter, in a message sent to staff Thursday, said staffers would be notified by 9am. Friday if they had lost their position or were still employed, the Journal reported. By early Friday, Twitter began notifying employees about their future employment status, according to documents viewed by the Journal.

Roughly 50% of Twitter’s workforce has been hit with lay-offs, according to an email sent overnight to one of those affected in the U.S. that was viewed by the Journal. It didn’t specify what departments the terminated employees worked in.

The Twitter Headquarters in San Francisco, California. Half of Twitter's 7,500 employees were laid off on November 4, an internal document showed, as new owner Elon Musk began a major revamp of the troubled company.

Twitter had more than 7,500 employees at the start of this year, according to a regulatory filing.

The staff reductions were intended “to place Twitter on a healthy path,” according to the company’s Thursday email. “We recognise that this will impact a number of individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company’s success moving forward,” the company added.

In the lay-off emails, Twitter said employees assigned “non-working” status would continue to receive compensation and benefits through a separation date, which for one person was designated as early February and for another early January. It said to expect to receive one month’s base pay in severance approximately 45 days after the termination date, in addition to providing instructions for returning company property such as laptops.

Twitter didn’t say whether employees should expect to receive year-end bonuses, which historically have been based on individual and company performance. The company also didn’t mention whether employees would receive equity payments during the nonworking period.

Some employees said they had lost access to Twitter communication tools overnight. An email sent to an employee in Canada and seen by the Journal said that suspended access to the company’s systems didn’t mean the person’s employment has been terminated.

Staff retaining their roles were also told that they are still Twitter employees and that Mr. Musk is looking forward to communicating with them about his vision for the company soon, according to an email seen by the Journal. The email added that Twitter’s offices will reopen Monday. In Thursday’s email about pending headcount reductions, Twitter had said its offices were being temporarily closed and asked employees to go home.

The billionaire spelled out some of his vision at an investment conference in New York Friday. The goal, he said, is to create a super app called X.com, building on plans he hashed out more than 20 years ago when he helped build what is now PayPal Holdings Inc. Such super apps like WeChat, which has a large user base in China, allow users to message others and send people money, among other features.

Mr. Musk also discussed his plan to raise the price of Twitter Blue, a subscription service, from $4.99 a month to $7.99 and give people who sign up for it the ability to post long-form videos and podcasts, among other features. Twitter doesn’t currently allow videos longer than two minutes and 20 seconds. Subscribers would also have their accounts verified, he said, a status Twitter so far has granted only to users it deems as notable at no cost to them. Mr. Musk didn’t address the widespread lay-offs.

The lay-offs cap a tumultuous period for Twitter staff that began in April, when the company disclosed Mr. Musk had become its largest individual shareholder. Mr. Musk then agreed to join Twitter’s board, before deciding not to. He launched a bid for the company that Twitter eventually accepted. Weeks later Mr. Musk raised questions about the deal, then tried to abandon it, before reversing course again last month and saying he would go ahead with the transaction. Along the way, he at times criticised the company and its executives.

Twitter employees have been bracing for job cuts. The Journal previously reported that the company was drafting plans for broad lay-offs, with one investor saying up to 50% of staff could be cut and that employees would be evaluated to determine the scope of the firings.

Signs of pushback against Twitter’s actions emerged in the wake of the apparent dismissals. In a federal lawsuit dated Thursday, a handful of Twitter employees accused the company of violating federal and California law in failing to provide enough warning of a mass lay-off.

Twitter didn’t immediately respond to a request for comment about the lawsuit or lay-offs.

The lawsuit, filed in California federal court by five former employees of Twitter who said they were terminated this week, said the company’s lay-offs violated the federal Worker Adjustment and Retraining Notification Act and its California equivalent, which require giving 60 days of advance written warning of dismissing a large number of employees of a company at once. The lawsuit asked the court to issue an order blocking Twitter from its alleged violations of the acts. Twitter didn’t immediately respond to a request for comment.

In April, as Mr. Musk was moving to buy Twitter, entrepreneur Jason Calacanis, a close ally, suggested cutting the number of Twitter employees to roughly 3,000, according to messages between the two, which were released as part of litigation around the transaction.

A staff of 3,000 would represent the lowest level since 2013, the year Twitter went public, when the platform had about 2,700 employees and its revenue was roughly 13% of its level last year.

Twitter’s employee numbers began climbing in 2019, after ranging between approximately 3,000 and 4,000 for several years. Twitter has said that the increase in recent years was driven by investments in engineering, product, design and research.

Even before officially taking control at Twitter, Mr. Musk had indicated that he was concerned about the company’s expenses. Twitter has posted a loss in eight of its past 10 fiscal years, according to FactSet.

Mr. Musk moved quickly to make personnel changes at the top of the company. Last week, on the same day he closed the deal, he fired Twitter Chief Executive Parag Agrawal and three other top executives. Mr. Musk fired the executives for cause and is saying he isn’t required to pay them multimillion-dollar severance packages, the Journal reported. Other executives have departed since.

Mr. Musk also had been trying to allay any concerns by advertisers about the impact his self-proclaimed stance as a free-speech absolutist would have on the platform. Twitter wouldn’t become a “free-for-all hellscape, ” he said. He met with advertisers and said he had spoken with civil-society leaders about the company’s policies. Mr. Musk also said he plans to create a content moderation council including people with diverse viewpoints to help Twitter make content decisions.

Broadly, the social-media industry is struggling with weaker revenue from digital advertisers. Such advertising has slowed due to several factors, including rising inflation, the war in Ukraine, and Apple Inc. privacy changes that have made it harder to track the performance of ads. Twitter rival Snap Inc. this year said it was letting 20% of staff go. Facebook parent Meta Platforms Inc. also has indicated it was trimming ranks.

Tech companies beyond social media also have embarked on belt tightening that is leading to job losses and hiring freezes. On Thursday, ride-hailing company Lyft Inc. and payments company Stripe Inc. announced major lay-offs, and Amazon.com Inc. said it would freeze corporate hiring for months.

The Wall Street Journal