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Elon Musk warns of possible bankruptcy amid company turmoil

Elon Musk warns of possible bankruptcy amid company turmoil
Photo Credit: Pixabay
11 Nov, 2022
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Twitter’s new owner Elon Musk raised the possibility of the social media platform going bankrupt, following a warning from a US privacy regulator and the exit of some the company’s senior leaders.  

In his first meeting with employees, Musk said that he ‘could not rule out bankruptcy’. He had warned them to prepare for a “dire” economy and put an immediate end to remote work

Bloomberg News reported, two weeks after buying Twitter for $44 billion, credit experts said that Twitter's finances in a “precarious position”.  

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Meanwhile, Twitter saw another round of senior level exit. On Thursday, head of trust and safety Yoel Roth and Twitter's Chief Security Officer Lea Kissner had quit. The company’s Chief Privacy Officer Damien Kieran and Chief Compliance Officer Marianne Fogarty also resigned.  

The US Federal Trade Commission said that 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.  

“We are tracking recent developments at Twitter with deep concern,” Douglas Farrar, the FTC’s director of public affairs, told Reuters, quoting Farrar as saying: “No CEO or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them.”  

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Musk attorney Alex Spiro however told some employees that Twitter would remain in compliance. “We spoke to the FTC today about our continuing obligations and have a constructive ongoing dialogue,” Spiro wrote.  

Musk himself had warned that the company may lose billions of dollars next year, the Information reported. He had earlier said the company was losing more than $4 million a day, largely because advertisers started fleeing once he took over.  

As per recent report by Reuters, 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, it said. 

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Last week, Musk started 'cleaning the house' slashing nearly half its workforce, promised to stop fake accounts and started charging $8 a month for the Twitter Blue service that will include a blue check verification.