Elon Musk apparently piled up a gigantic mountain of debt when he took over Twitter. Analysts estimate that interest payments have risen to 20 times the previous year's level. Massive savings should help alleviate the problem.
Twitter is apparently planning extensive layoffs just a few days after the takeover by US billionaire Elon Musk. It is expected that both software engineers and other employees will be affected by the dismantling, an insider said. The extent of the layoffs was initially unclear. According to its own information, Twitter employs around 7,500 people.
At the beginning of the year, Twitter said it was looking for ways to make savings due to the macroeconomic environment. Hiring slowed significantly in the second quarter, according to a statement to the US Securities and Exchange Commission. Social media companies are feeling the effects of rising inflation, recession fears and the aftermath of the war in Ukraine in the form of falling advertising revenues this year. The New York Times previously reported on Twitter's plans to cut jobs across the company.
Musk had already expressed in June that he did not think the cost situation at Twitter was good, as reported by people who followed a virtual meeting between the designated new owner and employees at the time. He didn't rule out layoffs at the time, adding that anyone making a significant contribution to the company needn't worry.
In the wake of Musk's acquisition, Twitter has incurred $13 billion in debt, which analysts say will increase pressure to cut costs and boost revenue. Analysts estimate, based on terms previously set out in documents related to the transaction, that Twitter will have to pay more than $1 billion in annual interest payments, compared to about $51 million last year. Twitter has average annual earnings before interest, taxes, depreciation and amortization of about $700 million over the past five years.
