Twitter in Tatters – What’s Next for the Social Media Platform?

With each week that passes, the situation appears more cringeworthy and many are talking more about ‘when’ Twitter will fail rather than ‘if.’

With a global downturn on the horizon and many of the big tech firms laying off workers left and right, how can a company like Twitter pivot from this messy year of legal battles, political upheaval, whispers of bankruptcy, and fleeing advertisers?

Last Week

Musk on the 16th of November asked via email that his remaining staff either commit to long hours and being ‘extremely hardcore’ or take a severance package of three months’ wages. It seems that many weren’t willing to match the work ethic of their new CEO, who is known for putting in some ridiculously long days at work himself.

Recently in November, at a conference held by Baron Capital Group, he commented onstage that his own workload had increased from around 70 to 80 hours up to nearly 120. “Go to sleep, I wake up, work, go to sleep, work, do that seven days a week,” he said. If that’s what Musk means by ‘extremely hardcore’ it’s not hard to imagine why so many Twitter staff have since pulled the pin.

It seems like the worst conceivable moment for Musk to issue his ultimatum too, as the 2022 FIFA World Cup began over the weekend, which has always been an event that creates the most worldwide traffic to the site. Even under ideal conditions, the World Cup presents a significant challenge to the platform, necessitating close coordination between members of the site-reliability-engineering team to guarantee that mission-critical services continue to function.

The Guardian reported that the platform was already failing to remove the vast majority of severely racist tweets about indigenous players in the lead-up, sparking concerns about abuse.

Active Platform Under Construction

Twitter has never been a very profitable company, but lately, the company is said to be losing something like 4 million dollars a day. Money needs to start coming in as soon as possible for the platform to stay afloat, and the latest flop with the subscription service hasn’t helped. The service, known as Twitter Blue, was dumped after impersonators took advantage of an opportunity to become “certified” by only paying $8 per month for the privilege.

Musk made an effort to persuade major advertisers that his messy acquisition of Twitter wouldn’t have an adverse effect on their brands. He admitted that certain “dumb things” may occur as he was working to improve and secure the user experience. Musk, though, assured that these experimentation would not damage the brands’ reputations.

Eli Lilly, the global pharmaceutical company, will be one such brand that will strongly disagree. A fake account claimed in a tweet that insulin was now free for customers, which caused the stock price to temporarily tumble, and the company was forced to defend itself.

Musk has ruthlessly eliminated teams that deal with Twitter’s complicated legal and privacy regulations and the enforcement of those policies, as well as technical workers with vital institutional expertise. In addition to stopping new code from being deployed, he also plans to cut off Twitter’s microservices.

Earlier this month, Musk warned that the business could soon go under, saying that without an increase in subscription money, it would not be able to withstand the next economic downturn.

90% of Twitter’s annual revenue of $5.1 billion (£4.3 billion) comes from advertising, albeit this revenue stream has been significantly impacted by a decline in expenditure by important clients such as General Motors.

Musk said categorically after the purchase that there had been a “dramatic drop” in the revenue generated by adverts.

A Management Style that Might Need Work?

It is well known that Elon Musk has a reputation for being a somewhat brash and demanding boss of SpaceX and Tesla, he tends to place the utmost weight on the quality of the product.

Regardless of whether the workers who are developing the goods agree with how he intends to reach his goals or the goals themselves, they are often expected to go above and beyond to achieve success. Some have even reported having slept on the floor of their offices to meet their deadlines.

Ex-employees of Tesla have said that Musk is only interested in the company’s bottom line, and that settling disputes with the billionaire is impossible without first establishing a level of trust. One former Tesla employee noted that working long hours is inevitable, therefore individuals must evaluate whether or not they can maintain such a schedule.

Surely having requirements of his employees like these will not bode well for rebuilding the company, especially since they will really need to hit the ground running to regain the trust of their users and advertisers before they flee to alternative social media platforms.

Disclaimer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ActivTrades Corp is authorised and regulated by The Securities Commission of the Bahamas. ActivTrades Corp is an international business company registered in the Commonwealth of the Bahamas, registration number 199667 B.

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.

Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.