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These Children Are Making Millions on YouTube

Three years ago, YouTubers who go by Vlad, Niki, Diana and Nastya were friends cruising around Miami on a 97-foot yacht to celebrate a birthday. Today, they are locked in a fierce rivalry over YouTube supremacy.  

They’re not even 10.

The children are stars of three YouTube channels—“Vlad and Niki,” “Like Nastya” and “Kids Diana Show.” They are the three most popular live-action YouTube kids channels in the world, with nearly 300 million YouTube subscribers between them. Now they’re expanding into everything from streaming shows to branded toys to licensing deals, all worth tens of millions of dollars.  

‘These kids who came from nowhere have more influence than Mickey Mouse.’

“These kids who came from nowhere have more influence than Mickey Mouse,” says Eyal Baumel, a longtime strategist for YouTube personalities, including “Like Nastya.”

Across the three channels, the videos play like live-action cartoons in a suburban fantasy land. Kids dress up like superheroes, crawl over giant vegetables and drive around in motorized toy cars. Mom and dad are sidekicks. 

The more success the kids have found, the swankier the toys and outings have become. In one video, Vlad and Niki snub mom and the Range Rover she bedecked in fluffy pink boas for a ride in dad’s hot red Ferrari. In another video from this year, the “Kids Diana Show” hits the road, staying in a resort in Maldives where the kids and parents hop aboard a yellow submarine.  

Videos feature lots of “oohs,” “aahs,” applause and minimal dialogue—which makes it easy to redub the YouTube posts, which are mostly in English, into other languages including Arabic, Spanish or Indonesian. 

“Kids feel that Vlad and Niki are their friends,” says their mother, Victoria Vashketov, of her children, who are 9 and 7 years old, respectively.

Toy makers pay the young celebrities to play with their products. Rates can range anywhere from $75,000 to more than $300,000, according to a person familiar with such deals. 

The YouTubers also have exclusive lines of playthings branded with their names and likenesses. There’s a caped Vlad action figure and palm-sized figurines of Diana’s entire family, which can be purchased at big U.S. retailers like

Walmart

and Target as well as in countries including Sweden and Mongolia, according to the channels’ representatives. 

Shenzhen, China-based Zuru Toys produced a specialty line of “Vlad and Niki” toys after entering into a partnership with the family in 2020. The company’s co-founder,

Nick Mowbray,

says he got into business with the boys because they have appeal globally.

The Youtube awards the Vashketov family has received are on display in their home just outside Miami.

Major streaming services are putting the videos on platforms including HBO Max and Amazon too. 

“You can create a global franchise without a major studio,” says Dan Weinstein, who represents “Vlad and Niki” under the banner of his company Underscore Talent and has helped other internet sensations cross over to traditional media channels. “I think that’s pretty mind-blowing to think about.” 

Timing is everything

Around the time that Vlad, Niki, Diana and Nastya were toddlers, iPads were becoming the new babysitters and videos featuring toddlers unboxing new toys on camera were taking over children’s content on YouTube. 

Among the young personalities that began influencing consumer behavior was Evan from EvanTubeHD, a toy and gaming YouTuber who started posting videos featuring Angry Bird toys when he was 5 years old and became one of the first kid YouTubers to achieve stardom on the platform. Ryan Kaji—often hailed as the reigning kid king of YouTube—was reviewing popular toys like Thomas the Tank Engine and raking in millions. They created a formula for the kinds of videos that could rack up millions of views: Give a cute kid a coveted name-brand toy, film them playing with it, then post. 

The three families leaned into that formula.

Vlad and Niki’s parents started making videos out of their home in Moscow. Sergey Vashketov was a midlevel executive at a food manufacturer; Victoria, a former gymnast. Early videos, which are in Russian, show Vlad and Niki guzzling bottles of

Coca-Cola

and frolicking with life-size bags of M&Ms and Skittles. 

Nastya, whose full name is Anastasia Radzinskaya, comes from Krasnodar, Russia. Her parents say they started posting videos of their daughter on YouTube to show off her speaking skills after a doctor falsely diagnosed her with cerebral palsy and said she might never speak. Some of Nastya’s first videos show her playing with Legos and opening a

Disney

-themed mystery egg. 

Diana’s parents—Olena and Volodymyr Kidisyuk—started making videos out of their home in Kyiv, Ukraine, training their camera on their daughter and older brother Roma, who played with popular toys in videos like Peppa Pig, Hot Wheels and Play-Doh.

Each of the three channels began humbly, staging the videos in basic locations like at the kitchen table or in a local park, shooting with smartphones and employing very little, if any editing. After videos began racking up millions of views on YouTube, the parents saw an opportunity to create a business around them, and they began investing in making more polished videos involving more extravagant locations and toys. The more popular the videos, the more often YouTube’s algorithm recommended their posts to kids. 

Eventually, the families moved from Ukraine and Russia to sunnier spots like Dubai and Thailand that allowed for filming outdoors year round. About four years ago, the three families met in Miami and began a friendship, according to Ms. Vashketov. Nastya, who was having a birthday party, invited Vlad, Niki and Diana. Through the years the families have hosted several other birthday parties together, filming their kids playing together while the lucky birthday boy or girl opens mountains of flashy new toys. Birthday videos also perform really well on YouTube, says Ms. Vashketov.

Traveling to amusement parks and going on vacation also often feature in videos. Between them, the three families have filmed and posted videos from places like Thailand, Italy, Hawaii and the French Alps. They’ve also spent time together in Dubai where two of the families lived full time for a spell.

Luck and timing were important. So too were analytics, said Mr. Weinstein, who has been advising digital creators like the Vashketovs for more than a decade. 

YouTube helps creators build their audiences by providing data-driven tools that can analyze how their videos perform and help plan their content. That includes knowing what YouTube audiences are searching for, what the creator’s viewers are searching for, when they are on YouTube, other channels that the audience watches and other data points. It allows creators to engage in their own brand of A/B testing, tweaking each nuance of a channel’s presentation to see how it might impact viewership, including the color scheme, titles for the videos and even what types of thumbnail photos impact viewership.

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“Sergey and Victoria are voracious students of YouTube and content creation,” said Mr. Weinstein.

Today, the families have teams of people working behind the scenes. 

“Vlad and Niki” has a film crew of up to five people at a time, including location scouts, camera operators and people to help secure props. They also work with people to help translate videos for their foreign-language channels, a mobile-gaming applications design team and an assistant who helps manage social media.   

The Kidisyuks signed with pocket.watch, a company that helps YouTube kids and family creators build franchises around their channels, including additional branding and merchandising opportunities, consumer products, mobile gaming and the development and licensing of additional content. Pocket.watch represents more than 30 kids and family creators, including Ryan Kaji.

The Vashketovs recently bought a $12.5 million, eight-bedroom mansion.

Hollywood studios have taken interest too.

Nastya’s team is developing an animated series with Will Smith’s production company, Westbrook.

Netflix

has shown interest in the series and talks are ongoing, according to a person familiar with the matter. 

HBO Max spent seven figures licensing “Vlad and Niki” content for its service, according to another person, who added that the streamer is considering producing two scripted shows including an animated series based on the two boys. 

Netflix and HBO Max didn’t respond to requests for comment.

Diana and Roma starred in a promotional video for Paramount’s recent “Paw Patrol” movie and at one point had content available on both Amazon Prime and

Roku.

The sister and brother duo also have an animated YouTube series featuring Diana’s alter ego, Princess of Play, sparring with her nemesis Boris the Baron of Boredom. 

Competition

With such lucrative deals up for grabs, the rivalry among the channels has intensified over the years, causing the families to drift apart, according to people close to the families. 

Competition is especially stiff between Diana and Nastya, who both appeal to girls. The two are neck and neck on YouTube. Nastya currently has 102 million subscribers while Diana has 104 million. Sometimes battles erupt between merchandising partners fighting over things like prime shelf space at major retailers, said one person. 

Vlad and Niki’s mom says she sometimes will check to see how well Nastya or Diana videos have performed. But Victoria Vashketov plays down the competitiveness: “As parents, we all get along, and all the kids enjoy playing together.”

The families also share a brewing dilemma. Soon, their kid stars will grow into adolescents, perhaps too old to be making videos for preschoolers. 

Vlad already has an eye on the future, saying he dreams of following in the footsteps of YouTube’s top creator, MrBeast, who regularly produces elaborate contests or challenges he posts to his channel. Additionally, Mr. Weinstein is lining up opportunities for Vlad and his brother to get into the music business, hiring producers and songwriters who have worked with both Justin Bieber and Selena Gomez to help put together some original songs.

For now the Vashketovs are enjoying being settled right outside Miami, something that helps give the boys consistency with school, the parents say. They recently bought a $12.5 million, eight-bedroom mansion located in the swanky town of Golden Beach.

And the Vashketovs say their kids can stop making videos any time they want. “Our inspiration really comes from Vlad’s and Niki’s interest,” says Sergey. “If we try to do something that they are not into, it doesn’t look authentic.”

As Vlad gets older, his 3-year-old brother Christian may step in. Ms. Vashketov says, even though Christian has appeared in several videos already, there are no plans to create a channel for her youngest son. That also goes for the baby girl Ms. Vashketov gave birth to in September.

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Twitter Exodus Hits Teams Tasked With Regulatory, Content Issues Globally

Elon Musk’s

move to purge Twitter Inc. employees who don’t embrace his vision has led to a wave of departures among policy and safety-issue staffers around the globe, sparking questions from regulators in key jurisdictions about the site’s continued compliance efforts.

Scrutiny has been particularly close in Europe, where officials have in recent years assumed a greater role in regulating big tech companies.

Staff departures in recent days include dozens of people spread across units such as government policy, legal affairs and Twitter’s “trust and safety” division, which is responsible for functions like drafting content-moderation rules, according to current and former employees, postings on social media and emails sent to work addresses of people who had worked at Twitter that recently bounced back. They have left from hubs including Dublin, Singapore and San Francisco.

Many of the departures follow Mr. Musk’s ultimatum late last week that staffers pledge to work long hours and be “extremely hardcore” or take a buyout. Hundreds or more employees declined to commit to what Mr. Musk has called Twitter 2.0 and were locked out of company systems. That comes after layoffs in early November that cut roughly half of the company’s staff.

Twitter conducted another round of job cuts affecting engineers late Wednesday, before the Thanksgiving holiday in the U.S., people familiar with the matter said. The exact scope couldn’t be immediately learned, though some of the people estimated dozens of employees were let go.

Twitter sent fired engineers an email saying their code wasn’t satisfactory and offering four weeks of severance, some of the people said. Some other engineers received an email warning them to improve their performance to keep their jobs, the people said.

Ireland’s Data Protection Commission said this week it was asking Twitter whether it still had sufficient staff to assure compliance with the European Union’s privacy law, the General Data Protection Regulation, or GDPR. The company last week told the Irish data regulator that it did, but is still reviewing the impact of the staff departures, a spokesman for the Irish regulator said.

He said Twitter has appointed an interim chief data protection officer, an obligation under the GDPR, after the departure of Damien Kieran, who had served in the role but left shortly after the first round of layoffs.

In France, meanwhile, the country’s communications regulator said it sent a letter last Friday asking that Twitter explain by this week whether it has sufficient personnel on staff to moderate hate speech deemed illegal under French law—under which Twitter could face legal orders and fines.

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What will be the impact on Twitter of having a reduced staff to oversee regulatory and content issues? Join the conversation below.

The staff departures come as Twitter holds talks with the EU about the bloc’s new social-media law, dubbed the Digital Services Act, which will apply tougher rules on bigger platforms like Twitter by the middle of next year.

Didier Reynders,

the EU’s justice commissioner, is slated to attend a previously scheduled meeting with Twitter executives in Ireland on Thursday. He plans to ask about the company’s ability to comply with the law and to meet its commitments on data protection and tackling online hate speech, according to an EU official familiar with the trip.

Věra Jourová, a vice president of the EU’s executive arm, said she was concerned about reports of the firing of vast amounts of Twitter staff in Europe. “European laws continue to apply to Twitter, regardless of who is the owner,” she said.

Mr. Musk has said that he would follow the laws of the countries where Twitter operates and that it “cannot become a free-for-all hellscape.”

Twitter didn’t respond to a request for comment.

Late Wednesday, Mr. Musk tweeted that the number of views of tweets he described as “hate speech” had fallen below levels seen before a spike in such views in late October.
“Congrats to the Twitter team!” Mr. Musk wrote. 

Some of the people who either departed or declined to sign on to Twitter 2.0 appear to include Sinead McSweeney, the company’s Ireland-based vice president of global policy and philanthropy, who led government relations and compliance initiatives with regulations worldwide, as well as the two remaining staffers in Twitter’s Brussels office.

Ms. McSweeney and the two Brussels employees declined to comment, but emails to their work addresses started bouncing back undeliverable in recent days according to checks by The Wall Street Journal. Four other Brussels-based employees were earlier this month told they were being laid off, according to social-media posts and people familiar with the matter.

Twenty Air Street, London, the home of Twitter’s U.K. office.



Photo:

Dan Kitwood/Getty Images

Damien Viel, Twitter’s country manager for France, was also among a wave of staffers who posted publicly this week that they had left the company. He declined to comment when reached by the Journal.

At least some of the departures occurred in teams that reported to

Yoel Roth,

Twitter’s former head of trust and safety, who resigned earlier this month. In an op-ed for the New York Times, Mr. Roth said he resigned because Mr. Musk made it clear that he alone would make decisions on policy and the platform’s rules and that he had little use for those at the company who were advising him on those issues.

The team included Ilana Rosenzweig, who worked as Twitter’s senior director and head of international trust and safety. She has left the company, according to her LinkedIn profile. Based in Singapore, Ms. Rosenzweig led Twitter’s trust and safety teams across Europe, the Middle East and Africa, along with Japan and other Asia-Pacific countries, according to her profile.

“I decided not to agree to Twitter 2.0,” Keith Yet, a Twitter trust and safety worker based in Singapore, wrote on LinkedIn on Monday. Mr. Yet worked on child sexual exploitation issues and handling legal escalations from Japan and other countries, according to his LinkedIn profile. Attempts to reach Ms. Rosenzweig and Mr. Yet were unsuccessful.

The departures come amid a wave of new tech regulation, particularly in Europe. The Digital Services Act, which will by the middle of next year require tech companies like Twitter with more than 45 million users in the EU to maintain robust systems for removing content that European national governments deem to be illegal. 

The layoff announcements just keep coming. As interest rates continue to climb and earnings slump, WSJ’s Dion Rabouin explains why we can expect to see a bigger wave of layoffs in the near future. Illustration: Elizabeth Smelov

The act also requires these companies to reduce risks associated with content that regulators consider harmful or hateful. It mandates regular outside audits of the companies’ processes and threatens noncompliance fines of up to 6% of a company’s annual revenue.

Political leaders had warned that Mr. Musk’s Twitter would have to comply with EU rules. “In Europe, the bird will fly by our rules,” tweeted the EU’s commissioner for the internal market,

Thierry Breton,

hours after Mr. Musk completed his Twitter deal in late October tweeting, “the bird is free.”

A spokesman for the European Commission, the EU’s executive arm, said this week that it had active contacts with the company regarding the regulation and tackling disinformation and illegal hate speech, but declined to comment on the substance of Twitter’s compliance plans.

Activists and researchers are also concerned that the departures could undermine Twitter’s ability to block state-backed information operations aimed at spreading propaganda and harassing adversaries. The wave of departures “raises questions about how Twitter will moderate tweets and comments in a professional and neutral manner,” said Patrick Poon, an activist turned scholar at Japan’s Meiji University, who analyzes free speech.

—Liza Lin, Alexa Corse and Sarah E. Needleman contributed to this article.

Write to Sam Schechner at Sam.Schechner@wsj.com, Kim Mackrael at kim.mackrael@wsj.com and Newley Purnell at newley.purnell@wsj.com

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Disney’s ‘Avatar: The Way of Water’ Cleared for December Release in China

Chinese authorities have notified

Walt Disney Co.

DIS -1.40%

that “Avatar: The Way Of Water” will be released in China on Dec. 16, the same day it is slated to be released globally, according to people familiar with the matter.

Executives at Disney and at movie-theater chains had been closely watching for a decision from Chinese censors on the movie, director

James Cameron

‘s sequel to the 2009 science- fiction epic. It will be distributed by Disney-owned 20th Century Studios.

“This is fantastic news for Disney, for 

James Cameron

and for the movie, because the potential box office from China is enormous,” Paul Dergarabedian, senior media analyst at Comscore, said in an interview. “This may be the pivotal moment that indicates that ‘Way of Water’ will earn enough money to justify further installments of the Avatar franchise.”

The last seven superhero films produced by Marvel Studios, Disney’s most-profitable film studio over the past decade, haven’t received release dates in the crucial China market, denting the global box-office gross.

In July, for example, Disney cited the lack of a China release for “Thor: Love and Thunder,” the fourth solo film featuring Chris Hemsworth’s Thor character from the popular Avengers superhero team, as one reason the movie underperformed at the international box office.

Disney and other Hollywood studios have run up against Chinese censors in recent years, especially when their movies deal with sensitive political themes or when actors or directors make statements that Chinese authorities find objectionable.

Two recent Marvel films were blocked from release in China after comments that the Chinese government viewed as insulting, made by the director of one movie and a star actor of the other, were unearthed and circulated in the country.

While Disney hasn’t revealed the “Avatar” sequel’s budget, Mr. Cameron, the director, said in a recent interview in GQ magazine that the “Avatar” sequel was “the worst business case in movie history” and that it would have to be the third- or fourth-highest-grossing film in history just to break even. Disney has said that it plans to make five Avatar movies in total.

The first Avatar movie from 2009 grossed nearly $2.9 billion worldwide, with $259 million of that total coming from China, making it the highest-grossing movie of all time. It narrowly edged out Marvel’s “Avengers: Endgame” after a September 2022 rerelease of the movie added $73 million in ticket sales, according to Comscore, a box-office tracker.

It sparked a boom in multiplex construction in China, as Chinese audiences flocked to see the film in 3-D and government authorities sought to encourage consumers to spend more money in shopping centers.

Theaters saw lines for the first “Avatar” up to six hours long, and scalpers sold tickets for $100 apiece, according to

Richard Gelfond,

chief executive of the movie technology company

IMAX Corp.

In Beijing, Chinese authorities closed an IMAX theater so high- ranking party members could watch it at a private screening, he said. Before the 2009 movie, IMAX had 14 screens in China, but now has 800, with 200 more contracted to be built.

“Everything changed after ‘Avatar,’” Mr. Gelfond said. “It was really the match that lit the entire movie industry” in China.

Write to Robbie Whelan at robbie.whelan@wsj.com

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How Elon Musk’s Twitter Faces Mountain of Debt, Falling Revenue and Surging Costs

To make the deal work, Mr. Musk has been trying to add subscription revenue and reassure advertisers about the platform’s future. Twitter was losing money before Mr. Musk bought the company, and the deal added a debt burden that requires fresh sources of cash.

It is tough to determine the state of the company. Twitter no longer has to file regular financial reports to the Securities and Exchange Commission, which are crucial tools for determining a company’s financial health.

Analysts and academics have been able to piece together a picture of the company from information Mr. Musk has offered as well as details of the deal and the company’s last regulatory filings. Bankruptcy could be one result. Mr. Musk, the world’s richest person, could also raise new funds, or buy back debt from lenders, giving Twitter a buffer to turn around its business. 

Here is a look at their assessments of Twitter’s financial situation and prospects. 

Twitter Finances, Pre-Musk

Twitter is and was a popular tool for politicians, celebrities and journalists. But as a business, it was stagnating. 

It hasn’t booked an annual profit since 2019, and posted a loss in eight years of the past decade. The company’s net loss narrowed in 2021, to $221.4 million from $1.14 billion the previous year.

Twitter has struggled to attract new users and increase revenue, which came in at about $5.1 billion last year. In its last quarterly filing as a public company, for the period ended June 30, revenue was $1.18 billion, down slightly year-over-year. 

Nearly 90% of its revenue last year came from advertising, and it traditionally has been the company’s main source of revenue. In 2021, Twitter took in $4.51 billion from advertisers, and $572 million from licensing data and other services.

The company had more than $2 billion in cash and less than $600 million in net debt before the takeover talks—very little debt for a company in the S&P 500 index. But that cash position was down 35% from a year earlier as of June 30, filings show, and Mr. Musk paid for Twitter by taking on $13 billion in debt. He paid for the rest in equity, some contributed by multiple investors. 

Twitter had a market capitalization of $37.48 billion in March, the month before Mr. Musk agreed to buy it, S&P data showed. Social-media stocks have slumped sharply since then. But now, according to

Jeffrey Davies,

a former credit analyst and founder of data provider Enersection LLC, “This thing’s probably not worth more than what the debt stack is, quite frankly, unless you put a lot of option value just on Elon.” Mr. Musk last month said he and investors were overpaying for the company in the short term. 

Revenue Under Musk

Mr. Musk said earlier this month that Twitter had suffered “a massive drop in revenue” and was losing $4 million a day. It isn’t clear if that reflects the broader downturn in the digital ad market or the pause in advertising by several companies since Mr. Musk bought the business. 

Some companies, including burrito chain

Chipotle Mexican Grill Inc.,

cereal maker

General Mills Inc.

and airline

United Airlines Holdings Inc.,

have paused their ad spending on Twitter over uncertainty around where the company is headed. The departure of several top executives from its ad department have soured relationships, The Wall Street Journal has reported.

The exodus of advertisers poses a threat for a company so reliant on that revenue stream. “As an online ad company, you’re flirting with disaster,” said

Aswath Damodaran,

a finance professor at New York University’s Stern School of Business. 

Elon Musk has purchased Twitter, ending a monthslong saga over whether or not he would go through with his offer to acquire the social media platform. WSJ takes an inside look at the tweets, texts and filings to see exactly how the battle played out. Illustration: Jordan Kranse

Deal negotiations for long-term contracts that usually begin at the end of the year haven’t taken place yet or have been put on hold. Those deals comprise more than 30% of Twitter’s U.S. ad revenue, The Wall Street Journal reported.

Revenue will likely remain under pressure until advertisers fully grasp the new business model, potentially leading many of them to return to the platform, said

Brent Thill,

a senior analyst at Jefferies Group LLC, a financial-services firm. “Those advertisers will come back if they feel that the users are there and there’s an ability to monetize their advertisement,” Mr. Thill said. 

But that could take time. Mr. Thill said it could take months for advertisers to get clarity. “It’s an enigma,” he said.  

Market-research firm Insider Intelligence Inc. recently cut its annual ad-revenue revenue outlook for Twitter by nearly 40% through 2024. 

Mr. Musk wants the company to lean more on subscriptions and depend less on digital advertising. He said last Tuesday that the company’s upgraded subscription service, costing $7.99 a month, would launch Nov. 29. 

A walkway at Twitter headquarters in San Francisco. The company has aggressively cut staff to reduce expenses.



Photo:

George nikitin/Shutterstock

Reducing Costs

The company has moved quickly to slash costs, including cutting its staff by half. Salaries and other compensation make up a large chunk of overall expenses. The company had 7,500 full-time employees at the end of 2021, up from 5,500 a year earlier, filings show.

The layoffs of roughly 3,700 people could save the company roughly $860 million a year, if the employees that are leaving made an average of about $233,000 annually—the company’s most recently disclosed median pay figure. The estimated savings would represent about 15% of Twitter’s $5.57 billion in costs and expenses last year. Its costs and expenses climbed 51% from the previous year, as hiring drove up its payroll.

More employees left the company last week, rejecting Mr. Musk’s demand that they commit to working “long hours at high intensity” to stay.

Debt Mountain 

Before Mr. Musk’s acquisition, net debt totaled $596.5 million as of June 30, according to S&P Global Market Intelligence, a data provider. That compares with a negative balance of $2.18 billion the prior-year period, indicating a cash surplus.

Twitter paid $23.3 million in interest expense in the quarter ended June 30, according to a filing. 

Now, the company will have to pay at least $9 billion in interest to banks and hedge funds over the next seven to eight years, when the $13 billion in debt matures, according to a review of Twitter’s loans by Mr. Davies, the former credit analyst.

The interest payments are substantial for a company that reported $6.3 billion in total operating cash flow over the past eight years, he said. 

What’s more, the company’s debt stack now includes floating-rate debt, meaning that interest costs are set to rise as the Federal Reserve continues to increase interest rates. Twitter’s debt was entirely fixed rate before the deal. 

Twitter’s credit ratings, which were below investment grade before the transaction with Mr. Musk, have deteriorated further.

Moody’s

Investors Service on Oct. 31 downgraded Twitter’s rating to B1 from Ba2, a two-notch drop, and S&P Global Ratings on Nov. 1 downgraded it to B- from BB+, a five-notch drop. 

If Twitter files for bankruptcy, Elon Musk’s $27 billion investment would likely be wiped out.



Photo:

Susan Walsh/Associated Press

Financial Prospects 

Twitter’s financial challenges could result in the company filing for bankruptcy, raising equity or buying back some debt from its lenders, analysts and academics said. 

If Twitter files for bankruptcy, as Mr. Musk warned was possible in an all-hands meeting earlier this month, his $27 billion investment would likely be wiped out because equity holders are the last to be paid when a company restructures.

Buying back debt from lenders at a steep discount would help the company reduce its debt load and interest costs as well as its valuation, which would be beneficial in the long run, Mr. Davies said. 

“I don’t think they can issue any more debt,” Mr. Davies said. “It’s a really, really tough structure.” 

The company could also replace some of the debt with equity, both from Mr. Musk and from outside investors, said

David Kass,

a finance professor at the University of Maryland’s

Robert H. Smith

School of Business. For that, Mr. Musk would need to persuade potential investors that he has a viable long-term business plan, he said. Replacing debt could enable the company to generate cash. Mr. Musk has said some of his latest

Tesla Inc.

stock sale, yielding almost $4 billion in cash, was because of Twitter. 

If successful, the company could generate positive free cash flow in two or three years, which it could use to pay down the residual debt and eventually go public again, Mr. Kass said. “The prospect of an eventual IPO within three to five years would be a very attractive enticement for large funds,” he said. 

—Theo Francis and Jennifer Williams-Alvarez contributed to this article.

Write to Mark Maurer at mark.maurer@wsj.com

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Opinion: Tesla investors have been the biggest losers in Elon Musk’s Twitter deal, and those losses continue

Twitter users have complained a lot about Elon Musk’s early moves after taking control of the social network, but their complaints seem tiny compared with what Tesla Inc. investors have had to suffer.

As the U.S. focused on election returns Tuesday evening, Tesla
TSLA,
-7.17%
Chief Executive Musk tried to slip through disclosure of his long-awaited stock sales, revealing that he had sold nearly $4 billion of Tesla stock in the previous three trading sessions. Musk did not publicly address the stock sales nor his intentions to sell more within 24 hours of the disclosure, even while tweeting roughly 20 times in that period.

[MarketWatch asked him on Twitter to address the sales twice, and did not receive a reply; Tesla disbanded its media-relations department years ago.]

The sales fueled a further downturn in shares of the electric-vehicle maker on Wednesday, when the stock fell 7.2% to $177.59, its lowest closing price since November 2020. Tesla is currently down 49.6% on the year, which would be far and away the worst year yet for the stock — the previous record annual decline was 2016, when it fell 11%.

The problems for Tesla investors go far beyond Musk selling its stock so that he could overpay for a company with limited growth prospects and a host of other problems, but the poor optics certainly start there.

“He sold caviar to buy a $2 slice of pizza,” said Dan Ives, a Wedbush Securities analyst.

Ives was one of several on Wall Street to predict Musk would need to sell more shares to either close a gap in his financing of the $44 billion deal to buy the social-media company, or provide additional operating funds. In a telephone conversation Wednesday, he said the Twitter move is “a nightmare that just won’t end for Tesla investors.”

One reason it isn’t ending is that Musk’s need for cash in relation to Twitter is not done with the recent sales, portending more in the future. Musk said in a tweet late last week that Twitter had a “massive drop in revenue” due to activists pressuring advertisers to pull their ads, and he will have to continue paying the employees he did not lay off while servicing a debt load that analysts have estimated will cost him $1 billion a year, much more than Twitter has cleared in profit in the past two years. Twitter reported a net loss of $221 million in 2021, and a net loss of $1.13 billion for 2020.

Read more about Elon Musk potentially pumping Tesla stock ahead of a sale

“The first two weeks of ownership have been a ‘Friday the 13th‘ horror show,” Ives said, adding that the verification plan and mass layoffs of 50% of employees — and then trying to rehire some of the engineers, developers and cybersecurity experts — was “really stupid.” And, according to CNBC, Musk has also pulled more than 50 Tesla engineers, many from the Autopilot team, to work at Twitter.

“But it’s consistent with how this thing has been handled,” Ives said, adding that Musk is “way over his skis” with the Twitter acquisition.

Amid all the chaos of his first two weeks running Twitter, how much time has Musk had to run his other companies? Musk was already splitting his Tesla time with SpaceX, The Boring Company, Neuralink and many other endeavors, and now he has taken on the gargantuan task of turning a social-media company that has never been highly profitable, nor valuable, into something worth the $44 billion he paid.

The effort, Ives said, has “tarnished his brand,” which in turn has a big risk of hurting Tesla. Many investors have bought into the Tesla story because they believe Musk is a genius and they back his vision of electrifying the automotive industry. Twitter does not meld into that vision, except as a platform to spout his opinions, vitriol and promote more wacky concepts.

Since Musk began his quest to buy the company, he has endured more criticism than ever before, with even some fans starting to throw shade or question his decisions. Investor Gary Black, managing partner of the Future Fund LLC, for example, pointed out that Tesla’s top engineers should not be running Twitter, where the news was getting worse.

Tesla is not a company that can just run itself at this point. Musk has claimed he did not want to be chief executive but that there was no one else to take over the car company, which is why he has served as CEO for years. It’s not clear, though, how much effort he actually has made at trying to recruit someone. Now, as Tesla faces its usual multitude of issues, he is off spending his time trying to turn Twitter into a payments company, or maybe a subscription company, or maybe an “everything app,” or whatever he comes up with tomorrow.

“Musk needs to look in the mirror and end this constant merry-go-round of Twitter overhang on the Tesla story, with his focus back on the golden child Tesla, which needs his time more than ever given the soft macro, production/delivery issues in China, and EV competition increasing from all corners of the globe,” Ives wrote in a note Wednesday, in which he reiterated an outperform rating on Tesla stock.

For Twitter to reach anywhere close to the valuation Musk paid for it, it’s going to need a ton of attention from a focused leader, but how can Musk be that leader and give Tesla the attention it deserves? The answer is he cannot, and is very likely to give the attention that Tesla needs to Twitter instead after committing $44 billion (not all of it his) to that endeavor. Tesla investors will be left staring at the sea of red that this year has wrought, and wondering if its leader is about to sell more shares to fund his other effort.



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Meta’s Mark Zuckerberg Says He Is Accountable as Company Preps for Mass Layoffs

Meta

META -0.26%

Platforms Inc. will begin laying off employees on Wednesday morning, Chief Executive

Mark Zuckerberg

told hundreds of executives on Tuesday.

The coming cuts are expected to total many thousands of employees and will likely be the largest of the year to date in the tech sector, The Wall Street Journal previously reported.

Mr. Zuckerberg appeared downcast in Tuesday’s meeting and said he was accountable for the company’s missteps, and that his over-optimism about growth had led to overstaffing, according to people familiar with the meeting.

Meta’s head of human resources,

Lori Goler,

told the group that employees who lose their jobs will be provided with at least four months of salary as severance, according to people familiar with the meeting.

Mr. Zuckerberg described broad cuts and specifically mentioned the recruiting and business teams as among those facing layoffs. A general internal announcement of the company’s layoff plans is expected around 6 a.m. Eastern time on Wednesday, with the specific employees losing their jobs informed over the course of the morning.

Following the meeting, company directors in numerous sections of the organization began notifying their subordinates of cuts and reorganizations.

Inside Meta, employees have been seeking specifics about the coming layoffs for days and planning for the worst by forming external groups with current colleagues and discussing how to use benefits.

Meta reported more than 87,000 employees at the end of September. Company officials already told employees to cancel nonessential travel beginning this week, the Journal previously reported.

The planned layoffs would be the first broad head-count reductions to occur in the company’s 18-year history.

Meta’s stock has fallen more than 70% this year. The company has highlighted deteriorating macroeconomic trends, but investors have also been spooked by its spending and threats to the company’s core social-media business. Growth for that business in many markets has stalled amid stiff competition from TikTok, and

Apple Inc.’s

AAPL 0.42%

requirement that users opt in to the tracking of their devices has curtailed the ability of social-media platforms to target ads.

After hiring aggressively through the pandemic, the tech industry is facing its biggest retrenchment in years. Twitter Inc. is laying off thousands of employees under new owner

Elon Musk,

as he tries to restructure the company to match his vision while facing widespread concern from advertisers about its new direction.

Snap Inc.

SNAP 2.70%

said in August it would cut roughly 20% of staff, or more than 1,000 employees, to prepare for what it said would be an expected period of low sales growth lasting into 2023.

Write to Jeff Horwitz at Jeff.Horwitz@wsj.com and Sam Schechner at sam.schechner@wsj.com

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Facebook Parent Meta Is Preparing to Notify Employees of Large-Scale Layoffs This Week

Meta Platforms Inc.

META 2.11%

is planning to begin large-scale layoffs this week, according to people familiar with the matter, in what could be among the largest round in a recent spate of tech job cuts after the industry’s rapid growth during the pandemic.

The layoffs are expected to affect many thousands of employees and an announcement is planned to come as soon as Wednesday, according to the people. Meta reported more than 87,000 employees at the end of September. Company officials already told employees to cancel nonessential travel beginning this week, the people said.

The planned layoffs would be the first broad head-count reductions to occur in the company’s 18-year history. While smaller on a percentage basis than the cuts at Twitter Inc. this past week, which hit about half of that company’s staff, the number of Meta employees expected to lose their jobs could be the largest to date at a major technology corporation in a year that has seen a tech industry retrenchment. 

CEO Mark Zuckerberg has said recently that ‘some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year.’



Photo:

Michael Nagle/Bloomberg News

A spokesman for Meta declined to comment, referring to Chief Executive

Mark Zuckerberg’s

recent statement that the company would “focus our investments on a small number of high priority growth areas.”

“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” he said on the company’s third-quarter earnings call on Oct. 26. “In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”

The Wall Street Journal reported in September that Meta was planning to cut expenses by at least 10% in the coming months, in part through staff reductions.

The cuts expected to be announced this week follow several months of more targeted staffing reductions in which employees were managed out or saw their roles eliminated.

“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Mr. Zuckerberg told employees at a companywide meeting at the end of June. 

Meta, like other tech giants, went on a hiring spree during the pandemic as life and business shifted more online. It added more than 27,000 employees in 2020 and 2021, and added an additional 15,344 in the first nine months of this year—about a fourth of that in the most recent quarter.

Meta’s stock has fallen by more than 70% this year. The company has highlighted deteriorating macroeconomic trends, but investors have also been spooked by its high spending and threats to the company’s core social-media business. Growth for that business in many markets has stalled amid stiff competition from TikTok, and

Apple Inc.’s

requirement that users opt-in to the tracking of their devices has curtailed the ability of social-media platforms to target ads. 

Last month, investment firm Altimeter Capital said in an open letter to Mr. Zuckerberg that Meta should slash staff and pare back its metaverse ambitions, reflecting the rising discontent among shareholders. 

Meta’s expenses have also risen sharply, causing its free cash flow to decline by 98% in the most recent quarter. Some of the company’s spending stems from heavy investments in the additional computing power and artificial intelligence needed to further develop Reels, Meta’s TikTok-like short-form video platform on Instagram, and to target ads with less data.

But much of Meta’s ballooning costs stem from Mr. Zuckerberg’s commitment to Reality Labs, a division of the company responsible for both virtual and augmented reality headsets as well as the creation of the metaverse. Mr. Zuckerberg has billed the metaverse as a constellation of interlocking virtual worlds in which people will eventually work, play, live and shop. 

Meta has invested heavily in promoting its virtual-reality platform, but users have been largely unimpressed.



Photo:

Guillermo Gutierrez/Zuma Press

The effort has cost the company $15 billion since the beginning of last year. But despite investing heavily in promoting its virtual-reality platform, Horizon Worlds, users have been largely unimpressed. Last month, the Journal reported that visitors to Horizon Worlds had fallen over the course of the year to well under 200,000 users, about the size of Sioux Falls.

“I get that a lot of people might disagree with this investment,” Mr. Zuckerberg told analysts on the company’s earnings call last month before reaffirming his commitment. “I think people are going to look back on decades from now and talk about the importance of the work that was done here.” 

Following the call, analysts downgraded their rating of Meta’s stock and slashed price targets. 

“Management’s road map & justification for this strategy continue to not resonate with investors,” analysts at RBC Capital Markets said in a note last month. 

Write to Jeff Horwitz at jeff.horwitz@wsj.com and Salvador Rodriguez at salvador.rodriguez@wsj.com

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Elon Musk Defies Management Mantras With His Rapid Overhaul at Twitter

In

Elon Musk’s

first week at Twitter Inc., he flouted much of the advice management gurus have dished out for decades.  

The billionaire’s swift actions stand in contrast to those of many new leaders, who often use the first 90 days to meet with employees, listen to concerns and assess how to improve a company’s products before embarking on strategy shifts, executives and corporate advisers say.  

“At a minimum, this is an untraditional approach,” said

Joel Peterson,

the former chairman of

JetBlue Airways Corp.

, who has served on dozens of corporate boards and advised chief executives across industries. “It’s iconoclastic, it’s unusual, it’s not what everybody would do—but I don’t really fault him for it.” 

Sweeping layoffs at Twitter have eliminated roughly half of the company’s workforce.



Photo:

Leonardo Munoz/VIEWPress/Getty Images

Mr. Musk—who once described himself to The Wall Street Journal as a “nano manager” steeped in the smallest details—appears to be employing many of the management tactics he deployed in building his other companies,

Tesla Inc.

and Space Exploration Technologies Corp., executives and advisers say. Those include a hands-on obsession over product decisions, a distaste for corporate structures and a focus on speed. Tesla is now the world’s most-valuable car company, and SpaceX is the world’s busiest rocket-launch operation.

Management specialists have long said that the first few months of an executive’s tenure are critical, a time when corporate chiefs can plot their agenda and begin to reset a corporate culture. Well-known books on the subject, such as “You’re in Charge—Now What?” say that new leaders should strike a balance, setting expectations internally and shaping their management team, while learning about the organization, too. 

Peter Crist,

chairman of Crist Kolder Associates, an executive-search firm, said new leaders typically spend the initial months looking to understand the talent within a company, learning employees’ strengths and weaknesses before making changes to staffing.

“Normally, a CEO from the outside coming in isn’t going to wipe the slate clean on the first day,” Mr. Crist said, adding that swift personnel changes can create uncertainty for the workers that remain. “There has to be both a stabilization of the enterprise model and importantly a stabilization of the talent, and it’s got to get done relatively soon,” he said.

Mr. Musk is hardly the first corporate iconoclast. He is also more than familiar with Twitter, having more than 100 million followers. 

Twitter Purchased by Elon Musk: A Timeline of How It Happened

On top of that, he is acquiring a company that for years lagged behind its rivals in attracting users and generating revenue, and the industry broadly is facing a slowdown in growth and other challenges that have slashed the valuations of companies such as

Facebook

owner Meta Platforms Inc. 

Some of Mr. Musk’s early actions struck corporate veterans as routine. He spent part of his week meeting with advertisers on video calls and in other settings, aiming to reassure customers that the platform remained a safe place for brands, the Journal reported. Several large advertisers, including

General Mills Inc.

and

Pfizer Inc.,

temporarily paused their advertising. Mr. Musk tweeted on Friday that Twitter had experienced a massive drop in revenue, which he said was due to “activist groups pressuring advertisers.”

Hubert Joly,

former CEO of retailer

Best Buy Co.

, said listening tours with customers and employees can be helpful in the initial period of engineering a turnaround. When Mr. Joly took the reins of Best Buy in 2012, he spent days in retail stores observing customer behavior and holding pizza meetings with staffers. In those gatherings, he asked three questions to employees: “‘What’s working? What’s not working? What do you need?’” Mr. Joly said.

Elon Musk has purchased Twitter, ending a monthslong saga over whether or not he would go through with his offer to acquire the social media platform. WSJ takes an inside look at the tweets, texts and filings to see exactly how the battle played out. Illustration: Jordan Kranse

Mr. Joly said that while he wanted to act fast, he resisted the temptation to quickly close stores or cut head count, as some proposed, or to immediately impose his ideas on the organization without understanding the existing dynamics. “My job was easy: Show up, ask these questions, listen carefully, take notes, and do what I was told because they had all of the answers,” he said of employees.

Mr. Musk has solicited feedback from some Twitter users, including prominent ones. He asked the author Stephen King whether he would consider paying a price of $8 a month to have his account verified. Members of Mr. Musk’s team also polled Twitter users about a subscription feature. 

SHARE YOUR THOUGHTS

What do you think of Musk’s management style? Join the conversation below.

Twitter on Saturday said it has begun rolling out software updates to charge users $7.99 a month for its Twitter Blue subscription service, up from $4.99 currently. Subscribers get their accounts verified, a service that has been free and offers a blue check mark to notable accounts.

Mr. Musk has said in the past that he believes CEOs err when they allocate too much of their schedule to meetings, rather than focusing on refining a product. “Spend less time on finance, spend less time in conference rooms, less time on PowerPoint and more time just trying to make your product as amazing as possible,” he said in a Journal interview in 2020. 

During an executive’s first few days at a company, though, leaders can become overwhelmed, advisers say. Some say it is important to focus on key strategic decisions, assemble a team and then delegate. 

At an investment forum in New York on Friday, Mr. Musk said that after buying Twitter, he is now working 120 hours a week instead of his typical 70 or 80 hours. Still, he expected that to eventually change. “Once Twitter’s set on the right path, it’ll be much easier to manage than SpaceX or Tesla,” Mr. Musk said.

Write to Chip Cutter at chip.cutter@wsj.com

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Elon Musk Says Twitter Has Had Massive Revenue Drop as Layoffs Begin

Twitter Inc. has suffered “a massive drop in revenue” because of advertisers cutting back on using the social-media platform, new owner

Elon Musk

said Friday, as the company started sweeping layoffs just over a week after the billionaire took it over.

Mr. Musk, in a tweet Friday, blamed the cutback in advertising on “activist groups pressuring advertisers.” He said that the company hadn’t changed content moderation and had tried to address activists’ concerns. “Extremely messed up!” he said, casting the pullback as an assault on free speech.

Mr. Musk’s remarks came after several big-name advertisers, including food company

General Mills Inc.,

GIS -0.63%

Oreo maker

Mondelez International Inc.,

MDLZ 0.44%

and

Pfizer Inc.

PFE 0.74%

and others have temporarily paused their Twitter advertising in the wake of the takeover of the company by Mr. Musk, The Wall Street Journal has reported. German car-making giant

Volkswagen AG

said it had recommended to its various brands they pause advertising on Twitter to assess any revisions the company makes to its brand safety guidelines.

Mr. Musk’s tweet comes after Twitter, in a message sent to staff Thursday, said staffers would be notified by 9 a.m. Friday if they had lost their position or were still employed, the Journal reported.

Twitter by early Friday began notifying employees who had been laid off, according to documents viewed by the Journal.

Roughly 50% of Twitter’s workforce has been hit with layoffs, according to an email sent overnight to one of those affected in the U.S. that was viewed by the Journal. It didn’t specify what departments the terminated employees worked in.

Twitter had more than 7,500 employees at the start of this year, according to a regulatory filing.

The staff reductions were intended “to place Twitter on a healthy path,” according to the company’s Thursday email. “We recognize that this will impact a number of individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company’s success moving forward,” the company added.

In the layoff emails, Twitter said employees assigned “nonworking” status would continue to receive compensation and benefits through a separation date, which for one person was designated as early February and for another early January. It said to expect to receive one month’s base pay in severance approximately 45 days after the termination date, in addition to providing instructions for returning company property such as laptops.

Twitter didn’t say whether employees should expect to receive year-end bonuses, which historically have been based on individual and company performance. The company also didn’t mention whether employees would receive equity payments during the nonworking period.

Some employees said they had lost access to Twitter communication tools overnight. An email sent to an employee in Canada and seen by the Journal said that suspended access to the company’s systems didn’t mean the person’s employment has been terminated.

The layoffs cap a tumultuous period for Twitter staff that began in April, when the company disclosed Mr. Musk had become its largest individual shareholder. Mr. Musk then agreed to join Twitter’s board, before deciding not to. He launched a bid for the company that Twitter eventually accepted. Weeks later Mr. Musk raised questions about the deal, then tried to abandon it, before reversing course again last month and saying he would go ahead with the transaction. Along the way, he at times criticized the company and its executives.

The Thursday email said Twitter’s offices would be temporarily closed to ensure the safety of employees, the company’s systems and customer data. Employees who were in an office or on their way to one were asked to go home, according to the email.

Twitter employees have been bracing for job cuts. The Journal previously reported that the company was drafting plans for broad layoffs, with one investor saying up to 50% of staff could be cut and that employees would be evaluated to determine the scope of the firings.

Elon Musk has purchased Twitter, ending a monthslong saga over whether or not he would go through with his offer to acquire the social media platform. WSJ takes an inside look at the tweets, texts and filings to see exactly how the battle played out. Illustration: Jordan Kranse

Signs of pushback against Twitter’s actions emerged in the wake of the apparent dismissals. In a federal lawsuit dated Thursday, a handful of Twitter employees accused the company of violating federal and California law in failing to provide enough warning of a mass layoff.

The lawsuit, filed in California federal court by five former employees of Twitter who said they were terminated this week, said the company’s layoffs violated the federal Worker Adjustment and Retraining Notification Act and its California equivalent, which require giving 60 days of advance written warning of dismissing a large number of employees of a company at once. The lawsuit asked the court to issue an order blocking Twitter from its alleged violations of the acts. Twitter didn’t immediately respond to a request for comment.

In April, as Mr. Musk was moving to buy Twitter, entrepreneur

Jason Calacanis,

a close ally, suggested cutting the number of Twitter employees to roughly 3,000, according to messages between the two, which were released as part of litigation around the transaction.

A staff of 3,000 would represent the lowest level since 2013, the year Twitter went public, when the platform had about 2,700 employees and its revenue was roughly 13% of its level last year.

Twitter’s employee numbers began climbing in 2019, after ranging between approximately 3,000 and 4,000 for several years. Twitter has said that the increase in recent years was driven by investments in engineering, product, design and research.

Even before officially taking control at Twitter, Mr. Musk had indicated that he was concerned about the company’s expenses. Twitter has posted a loss in eight of its past 10 fiscal years, according to FactSet.

Mr. Musk moved quickly to make personnel changes at the top of the company. Last week, on the same day he closed the deal, he fired Twitter Chief Executive

Parag Agrawal

and three other top executives. Mr. Musk fired the executives for cause and is saying he isn’t required to pay them multimillion-dollar severance packages, the Journal reported. Other executives have departed since.

Mr. Musk has leveraged other parts of his business empire to try to put his imprint on Twitter. He brought in some

Tesla

engineers to begin working on reshaping the social-media platform, the Journal reported. Also added to an internal company directory were some people who appeared to work for the Boring Co., a tunneling business Mr. Musk founded.

Broadly, the social-media industry is struggling with weaker revenue from digital advertisers. Such advertising has slowed due to several factors, including rising inflation, the war in Ukraine, and

Apple

privacy changes that have made it harder to track the performance of ads. Twitter rival Snap Inc. this year said it was letting 20% of staff go.

Facebook

parent Meta Platforms Inc. also has indicated it was trimming ranks.

Tech companies beyond social media also have embarked on belt tightening that is leading to job losses and hiring freezes. On Thursday, ride-hailing company

Lyft Inc.

and payments company Stripe Inc. announced major layoffs, and

Amazon.com Inc.

said it would freeze corporate hiring for months.

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Alexa Corse at alexa.corse@wsj.com

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Twitter Is Drafting Broad Job Cuts, Days After Elon Musk’s Takeover

Twitter Inc. is drafting plans for broad layoffs, according to people familiar with the matter, days after the social-media platform was taken private by billionaire

Elon Musk

for $44 billion.

The proposed layoffs are expected to reduce engineering positions as well as affect other areas at the company, one of the people said. Twitter has roughly 7,500 employees, according to a disclosure earlier this year. The full scale of cuts being discussed couldn’t be determined.

Earlier this year, Twitter said it was looking for ways to cut costs because of the macroeconomic environment, adding that it had significantly slowed hiring in the second quarter, according to a Securities and Exchange Commission filing in July. Social-media companies have grappled with market disruptions that have weighed on digital-ad spending this year, including soaring inflation, recession fears and the war in Ukraine.

Twitter has posted a loss in eight of its past 10 fiscal years, according to FactSet. The New York Times earlier reported Twitter’s plans for job cuts across the company.

Mr. Musk told employees in June that he believed costs were “not a great situation” at Twitter, according to people who viewed a virtual meeting then. He didn’t rule out layoffs, adding that anyone who is a significant contributor shouldn’t worry, according to the people.

Several employees have said they are worried that Mr. Musk could move to cut jobs before Nov. 1, which is a vesting date for Twitter’s compensation program. Employees’ grants were expected to be paid as cash after Mr. Musk’s acquisition, according to people familiar with the issue. A number of employees have said they are concerned Mr. Musk could try to avoid making those payments if their employment is terminated before Nov. 1.

Ask WSJ

The Musk-Twitter Deal

WSJ Financial Editor Charles Forelle and Alexa Corse, WSJ reporter covering Twitter, discuss Elon Musk’s takeover of Twitter. What does the future hold for the platform? And what does this deal mean for Mr. Musk’s business empire?

Before the deal closed, employees whose jobs were eliminated generally expected to receive cash for equity that would have vested within three months of leaving the company, plus the rest of their severance package, according to an internal memo reviewed by The Wall Street Journal.

As part of Mr. Musk’s takeover, Twitter added $13 billion of debt, which analysts say will increase pressure to cut costs and boost revenue. Analysts estimate, based on terms previously laid out in documents related to the transaction, that Twitter will be on the hook for annual interest payments of more than $1 billion, compared with some $51 million in 2021. Twitter has posted average annual earnings before interest, taxes, depreciation and amortization of about $700 million over the past five years.

Write to Alexa Corse at alexa.corse@wsj.com

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