Twitter is struggling amid Elon Musk’s dawdling about his purchase of it.
As the court date to prevent Elon Musk from backing out of his deal to buy Twitter nears, the social-media platform is struggling with staff departures, falling morale, and reduced spending from marketers, the Financial Times reports.
In April, Elon Musk announced that he held a 9.2% stake in Twitter, which made him the social-media company’s largest shareholder. Twitter’s stock price soared 25 percent after the announcement.
Later that month, the billionaire entrepreneur offered to buy all of Twitter at $54.20 per share—equaling about $44 billion. He said he originally invested in the platform because he believes it is failing in its potential to be the leading platform for free speech around the globe. In fact, he asked his 2 million followers if Twitter adhered to principles of free speech, and 70 percent said “no.”
Then earlier this month, Musk decided to back out of the deal, claiming there were too many fake accounts on the platform. Twitter has since sued Musk in Delaware Court of Chancery to complete the deal and requested the trial to take place in September. Musk, on the other hand, wanted to delay the trial until February 2023, stating that a case of this size takes time to prepare. Twitter was granted its wish of an expedited trial, with Chancellor Kathaleen McCormick, the presiding judge, setting a five-day trial for October.
Twitter suffered from a fall in revenue in the second quarter, which the company ultimately blamed on the economy and the “uncertainty” over the pending acquisition by Musk and a slump in digital ad spending. Twitter also reported it had significantly slowed hiring, been more selective with the new roles it was hiring for, and seen its attrition rate increase.
Twitter is “appearing a bit rudderless,” one former Twitter executive told the Financial Times. “It is hard not to be a little sympathetic, as nothing is of anybody’s choosing, forced to do what they didn’t want to do by a rich guy’s whim.”
Twitter advertising executives have been leaving the company, as the five-day October trial date gets closer.
“Everyone’s given up on leadership,” a senior Twitter employee says. “It seems like Twitter’s take is ‘This man is awful, but he should run the company’. Either way, it seems like the loser gets Twitter.”
Amid the ongoing drama, Twitter advertisers say the company’s ad sales are in shambles. Agency and sales reps are leaving the social-media platform and sales talent and advertisers have also shifted spending away from Twitter, according to an AdAge report.
“Twitter will have trouble in the near future reassuring skittish advertisers and their users that they’re going to be stable,” Media Matters for America president Angelo Carusone told the New York Times.
As the company battles Musk and executives are fleeing, costs have been on the rise. Twitter’s expenses totaled $1.52 billion, an increase of 31% year-over-year. Twitter said that $33 million of that cost was related to Elon Musk’s pending purchase.
All of this comes at a rough time. With the uncertainty of the economy and record-high inflation and rising interest rates, advertising companies are being very selective about where they spend their money and with all of this happening Twitter is not at the top of the list.
With other social media platforms flourishing and taking market share from Twitter, advertising agencies wonder if Twitter will survive all of this.
