Elon Musk Warns That Twitter Could Go Bankrupt Without Revenue

Elon Musk Warns That Twitter Could Go Bankrupt Without Revenue

Tesla CEO and Twitter Chief Elon Musk has informed Twitter employees that the company’s "economic picture ahead is dire." He warned that "bankruptcy isn’t out of the question." The billionaire said, "Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn."

Musk Informs of Grim Financial Situation at Twitter

Elon Musk, the billionaire who acquired Twitter for USD 44 billion about two weeks ago, sent his first email to all Twitter employees on Wednesday, informing them of the grim financial situation. "There is no way to sugarcoat the message," Musk wrote, adding:

"Frankly, the economic picture ahead is dire."

He detailed that the economic situation is worse for Twitter, which is highly dependent on advertising in a challenging economic climate. "70% of our advertising is brand rather than specific performance, which makes us doubly vulnerable," he said.

Musk continued, "That is why the priority over the past ten days has been to develop and launch Twitter Blue Verified subscriptions," elaborating:

"Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn. We need roughly half of our revenue from subscriptions."

However, Musk specified that the social media company will be "significantly reliant on advertising," so he is working to "ensure that Twitter continues to be appealing to advertisers." The billionaire clarified, "The road ahead is arduous and will require intense work to succeed."

Musk Announces Policy Changes

Musk has indicated policy changes at Twitter and has discontinued all remote work. He has announced that all employees of the social media giant are required to be in the office for a minimum of 40 hours per week unless they are physically unable to travel or have critical personal obligations.

Moreover, Musk held an emergency meeting with Twitter employees on Wednesday. He reportedly said:

"Bankruptcy isn’t out of the question."

Two Twitter executives, Robin Wheeler and Yoel Roth, reportedly left the company after the meeting. Musk laid off roughly half of Twitter's employees last week, claiming that he had no choice because the social media company is losing more than USD 4 million per day.

Musk admitted on Wednesday that his new USD 8-a-month verification system has problems. "Far too many corrupt legacy Blue ‘verification’ checkmarks exist, so there is no choice but to remove legacy Blue in the coming months," he tweeted. Nonetheless, he claimed that Twitter usage has increased since he took over the platform.

This week, he outlined how Twitter could generate revenue as a payment company after it filed papers with the US Financial Crimes Enforcement Network (FinCEN) to start a payment business. However, it remains to be seen how Musk can maneuver his ship in the choppy sea.