For all of Elon Musk’s talk about ridding Twitter of spam bots and introducing an edit button, his top priority when he takes charge may be more mundane—how to quickly cut costs. Given the amount of debt he is taking on in the acquisition, Musk will have a big incentive to lift Twitter’s profits as fast as possible.
That almost certainly means shrinking Twitter’s workforce, perhaps by as much as 10% to 20%. As things stand now, each of Twitter’s 7,500-strong employees generates less revenue than their counterparts at Snap, Pinterest, Alphabet and Meta Platforms, public disclosures show. (See the chart below.) Just to match the average of Snap and Pinterest would require cutting about 11% of Twitter’s employees, which could translate to a nearly 20% lift in profits, according to The Information’s analysis.
But that might not be enough to insulate Musk from the possibility that the economy will slump, cutting into ad revenue, or that interest rates will rise, lifting Musk’s financing costs. Musk could look to cut closer to 20% of employees—or 1,500 people—to gain more of a buffer.