Tag Archives: Social Media Platforms/Tools

Meta stock spikes despite earnings miss, as Facebook hits 2 billion users for first time and sales guidance quells fears

Meta Platforms Inc. shares soared in after-hours trading Wednesday despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year and promised more share repurchases amid cost cuts.

Meta
META,
+2.79%
said it hauled in $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.

Analysts polled by FactSet expected Meta to post fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that also met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts on average were projecting first-quarter sales of $27.2 billion.

Shares jumped more than 18% in after-hours trading immediately following the release of the results, after closing with a 2.8% gain at $153.12.

Alphabet Inc.’s
GOOGL,
+1.61%

GOOG,
+1.56%
Google and Pinterest Inc.
PINS,
+1.56%
benefited from Meta’s results, with shares for each company rising 4% in extended trading Wednesday.

“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”

Read more: Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss

Facebook’s 2 billion-user milestone was slightly better than analysts expected for user growth on Meta’s core social network. Daily active users across all of Facebook’s apps neared, but did not crest, another round number, reaching 2.96 billion, up 5% from a year ago.

Meta has been navigating choppy ad waters as it copes with increasing competition from TikTok and fallout from changes in Apple Inc.’s
AAPL,
+0.79%
ad-tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta has invested heavily in artificial-intelligence tools to rev up its ad-targeting systems and making better recommendations for users of its short-video product Reels, but it laid off thousands of workers after profit and revenue shrunk in recent quarters.

The cost cuts seemed to pay off Wednesday. While Facebook missed on its earnings, it noted that the costs of its layoffs and other restructuring totaled $4.2 billion and reduced the number by roughly $1.24 a share.

Meta executives said they now expect operating expenses to be $89 billion to $95 billion this year, down from previous guidance for $94 billion to $100 billion. Capital expenditures are expected to be $30 billion to $33 billion, down from previous guidance of $34 billion to $37 billion, as Meta cancels multiple data-center projects.

In a conference call with analysts late Wednesday, Zuckerberg called 2023 the “year of efficiency.”

“The reduced outlook reflects our updated plans for lower data-center construction spend in 2023 as we shift to a new data-center architecture that is more cost efficient and can support both AI and non-AI workloads,” Li said in her outlook commentary included in the release.

Meta expects to increase its spending on its own stock. The company’s board approved a $40 billion increase in its share-repurchase authorization; Meta spent nearly $28 billion on its own shares in 2022, and still had nearly $11 billion available for buybacks before that increase.

“Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending,” said Jesse Cohen, senior analyst at Investing.com.

The results came a day after Snap Inc.
SNAP,
-10.29%
posted fourth-quarter revenue of $1.3 billion, flat from a year ago and the worst year-over-year sales growth Snap has ever reported. But they also arrived on the same day Facebook scored a major win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta’s planned acquisition of VR startup Within Unlimited.

Read more: Meta wins bid to buy VR startup Within Unlimited, beating U.S. FTC in court: report

Meta shares have plunged 53% over the past 12 months, while the broader S&P 500 index 
SPX,
+1.05%
has tumbled 10% the past year.

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Elon Musk Explores Raising Up to $3 Billion to Help Pay Off Twitter Debt

Elon Musk

‘s team has been exploring using as much as $3 billion in potential new fundraising to help repay some of the $13 billion in debt tacked onto Twitter Inc. for his buyout of the company, people familiar with the matter said.

In December, Mr. Musk’s representatives discussed selling up to $3 billion in new Twitter shares, people familiar with the matter said.

Mr. Musk’s team has said to people familiar with the finances of the company that an equity raise, if successful, could be used to pay down an unsecured portion of the debt that carries the highest interest rate within the $13 billion Twitter loan package, people familiar with the matter said.

Paying off the debt would provide welcome financial relief to Twitter, which has struggled to keep advertisers on the platform. In November, Mr. Musk said Twitter had suffered “a massive drop in revenue” and was losing over $4 million a day. He also said that month that bankruptcy was a possibility for the company, although Mr. Musk later shared more upbeat prospects for the company, saying he expects Twitter to be roughly cash-flow break-even in 2023 as he has slashed some 6,000 jobs.

The state of the fundraising talks couldn’t be learned. In mid-December, Mr. Musk’s team reached out to new and existing backers about raising new equity capital at the original Twitter takeover price.

Mr. Musk’s advisers had hoped to reach a deal to raise cash at the initial takeover price by the end of 2022, according to an email sent to prospective investors at the time. However, some prospective backers said they balked at the terms, given concerns about Twitter’s financial performance. The Musk team didn’t specify a funding amount or purpose for the fundraise in the email.

Fidelity, one of the co-investors that backed Mr. Musk’s takeover of Twitter, wrote down its stake in Twitter by 56% in November, public filings show, suggesting Mr. Musk would face an uphill battle raising funds at the original valuation from outside investors. The banks holding the $13 billion in debt that backed his takeover of the company haven’t yet received any formal notice of any repayments, people familiar with the matter said.

Layoffs Across the Tech Industry

Representatives for Mr. Musk didn’t respond to requests for comment.

Twitter’s unsecured bridge loans, which total $3 billion, are the most expensive portion of the $13 billion debt package Mr. Musk incurred as part of his $44 billion acquisition of the social-media company. They carry an interest rate of 10% plus the secured overnight financing rate, a benchmark interest rate that has shot up in recent months and currently sits at 4.3%.

With every quarter that passes without Twitter refinancing the debt, the interest rate goes up by an additional 0.50 percentage point, according to regulatory filings. Twitter’s first quarterly interest payment is due at the end of the month, the filings show.

Twitter’s annual interest burden has increased by over $100 million since he announced the takeover deal last April, as the overnight rate has increased. At the time of the announcement, the overnight rate was 0.3%.

Elon Musk has said that Twitter is losing over than $4 million a day.



Photo:

Marlena Sloss/Bloomberg News

Twitter’s total interest expense has been estimated to be roughly $1.25 billion a year, according to a December analysis by

Jeffrey Davies,

a former credit analyst and founder of data provider Enersection LLC. By that estimate, Twitter is incurring roughly $3.4 million every day in interest-payment obligations.

On Dec. 13, Mr. Musk tweeted “beware of debt in turbulent macroeconomic conditions, especially when Fed keeps raising rates.”

Repaying the unsecured bridge loans would leave Twitter with a debt burden that has much more manageable interest rates. Twitter’s $6.5 billion in term loans and $3 billion in secured bridge loans carry an annual interest burden of 4.75% and 6.75%, respectively, plus the overnight rate, according to public filings.

Tesla CEO Elon Musk is set to testify in a federal trial over tweets from 2018 in which he floated the possibility of taking the company private. WSJ’s Rebecca Elliott explains what to know about the trial. Illustration: Adele Morgan

A potential deal would also provide a degree of relief for the banks that backed Mr. Musk’s takeover of the social-media company and that intended to sell the debt to third-party investors but changed course after deteriorating market conditions sank Wall Street’s appetite for exposure to risky bonds and loans.

The $13 billion of Twitter debt on bank balance sheets, one of the biggest “hung deals” of all time, has helped contribute to a drag in the number of mergers and acquisitions as banks’ firepower to back deals is tied up.

Morgan Stanley,

the lead bank on Twitter’s debt deal, has approximately $807 million in unsecured bridge debt on its balance sheet, while

Bank of America Corp.

,

Barclays

PLC and MUFG Bank Ltd. each have approximately $623 million of exposure, according to public documents and calculations by The Wall Street Journal.

Each of the four banks have more than $2 billion in other Twitter debt commitments on their balance sheets separate from the unsecured bridge facility, including term loans and other secured debt, the documents show.

Representatives of those banks declined to comment.

Write to Berber Jin at berber.jin@wsj.com and Alexander Saeedy at alexander.saeedy@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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How Apple Has So Far Avoided Layoffs: Lean Hiring, No Free Lunches

No company is certain to avoid significant cutbacks in an economic environment as volatile as the current one, and Apple isn’t immune to the business challenges that have hit other tech giants. It is expected next month to report its first quarterly sales decline in more than three years. Apple has also slowed hiring in some areas.

But the iPhone maker has been better positioned than many rivals to date in part because it added employees at a much slower clip than those companies during the pandemic. It also tends to run lean, with limited employee perks and businesses focused on hardware products and sales that have so far largely dodged the economic downturn, investors say.

An Apple spokesman declined to comment.

From its fiscal year-end in September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, the employee count at Amazon doubled, Microsoft’s rose 53%, Google parent

Alphabet Inc.’s

increased 57% and Facebook owner Meta’s ballooned 94%.

Apple has about 65,000 retail employees working in more than 500 stores who make up roughly 40% of the company’s total workforce.

On Friday, Alphabet became the latest tech company to announce widespread layoffs, with a plan to eliminate roughly 12,000 jobs, the company’s largest-ever round of job cuts.

Alphabet’s cut follows a wave of large layoffs at Amazon, Microsoft and Meta. The tech industry has seen more than 200,000 layoffs since the start of 2022, according to Layoffs.fyi, a website that tracks cuts in the sector as they surface in media reports and company releases.

The last big round of layoffs at Apple happened way back in 1997, when co-founder

Steve Jobs

returned to the company, which then cut costs by firing 4,100 employees.

So far, Apple’s core business has shown itself to be resilient against broader downturns in the market. The other four tech giants have suffered amid slowdowns in digital advertising, e-commerce and PCs. In its September quarter, Apple reported that sales at its most important business—the iPhone—advanced 9.7% from the previous year to $42.6 billion, surpassing analyst estimates.

After a period of aggressive hiring to meet heightened demand for online services during the pandemic, tech companies are now laying off many of those workers. And tech bosses are saying “mea culpa” for the miscalculation. WSJ reporter Dana Mattioli joins host Zoe Thomas to talk through the shift and what it all means for the tech sector going forward.

Apple may face a rougher December quarter, which it is scheduled to report on Feb. 2, as the company encountered manufacturing challenges in China, where strict zero-Covid policies damped much economic activity. Many analysts expect that demand hasn’t subsided for its iPhones and as the company continues to ramp back up manufacturing, demand is anticipated to move to the March quarter.

The company’s business model hasn’t been totally immune to broader slowdowns. Revenue from its services business continued to slow, growing 5% annually to $19.2 billion in the September quarter, shy of the gains posted in recent quarters.

Tom Forte,

senior research analyst at investment bank D.A. Davidson & Co., said he expects Apple to reduce head count, but it might do that quietly through employee attrition—by not replacing workers who leave. The company could move in the direction of making other cuts or adjustments to perks that are common in Silicon Valley. Apple doesn’t offer free lunches to employees on its corporate campus, unlike other big tech companies such as Google and Meta.

Some of the tech giants cutting jobs have spent heavily on projects that are unlikely to turn into strong businesses anytime soon, said Daniel Morgan, a senior portfolio manager at Synovus Trust Co., which counts Apple among its largest holdings. “Both Meta and Google are terribly guilty of that,” he said.

Meta has been pouring billions of dollars into its Reality Labs for its new ambitions in the so-called metaverse. Meta Chief Executive

Mark Zuckerberg

has defended the company’s spending on Reality Labs, suggesting that virtual reality will become an important technological platform.

After announcing the layoffs, Alphabet Chief Executive

Sundar Pichai

said the company had seen dramatic periods of growth during the past two years. “To match and fuel that growth, we hired for a different economic reality than the one we face today,” he wrote in a message to employees on Friday.

Apple also is working on risky future bets, such as an augmented-reality headset due out later this year and a car project whose release date is uncertain, but at a more measured pace.

Write to Aaron Tilley at aaron.tilley@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Tesla is not alone: 18 (and a half) other big stocks are headed for their worst year on record

In the worst year for stocks since the Great Recession, several big names are headed for their worst year on record with just one trading day left in 2022.

The S&P 500 index
SPX,
+1.75%
and Dow Jones Industrial Average
DJIA,
+1.05%
are both headed for their worst year since 2008, with declines of 20.6% and 9.5% respectively through Thursday. But at least 19 big-name stocks — and half of another — are headed for a more ignominious title for 2022, according to Dow Jones Market Data: Worst year ever.

Tesla Inc.
TSLA,
+8.08%
is having the worst year among the group of S&P 1500 constituents with a market capitalization of $30 billion or higher headed for record annual percentage declines. Tesla shares have declined 65.4% so far this year, which would be easily the worst year on record for the popular stock, which has only had one previous negative year since going public in 2010, an 11% decline in 2016.

Tesla may not be the worst decliner on the list by the time 2023 arrives, however, as another Silicon Valley company is right on its heels. Meta Platforms Inc.
META,
+4.01%,
the parent company of Facebook, has fallen 64.2% so far this year, as Chief Executive Mark Zuckerberg has stuck to spending billions to develop the “metaverse” even as the online-advertising industry that provides the bulk of his revenue has stagnated. It would also only be the second year in Facebook’s history that the stock has declined, after a 25.7% drop in 2018, though shares did end Facebook’s IPO year of 2012 30% lower than the original IPO price.

Only one other stock could contend with Tesla and Meta’s record declines this year, and Tesla CEO Elon Musk has some familiarity with that company as well. PayPal Holdings Inc.
PYPL,
+4.46%,
where Musk first found fame during the dot-com boom, has declined 63.2% so far this year as executives have refocused the company on attracting and retaining high-value users instead of trying to get as many users as possible on the payments platform. It would be the second consecutive down year for PayPal, which had not experienced that before 2021 since spinning off from eBay Inc.
EBAY,
+4.76%
in 2015.

None of the other companies headed for their worst year yet stand to lose more than half their value this year, though Charter Communications Inc.
CHTR,
+1.99%
is close. The telecommunications company’s stock has declined 48.2% so far, as investors worry about plans to spend big in 2023 in an attempt to turn around declining internet-subscriber numbers.

In addition to the list below, Alphabet Inc.’s class C shares
GOOG,
+2.88%
are having their worst year on record with a 38.4% decline. MarketWatch is not including that on the list, however, as Alphabet’s class A shares
GOOGL,
+2.82%
fell 55.5% in 2008; the separate class of nonvoting shares was created in 2012 to allow the company — then still called Google — to continue issuing shares to employees without diluting the control of co-founders Sergey Brin and Larry Page.

Apart from that portion of Alphabet’s shares, here are the 19 large stocks headed for their worst year ever, based on Thursday’s closing prices.

Company % decline in 2022
Tesla Inc.
TSLA,
+8.08%
65.4%
Meta Platforms Inc.
META,
+4.01%
64.2%
PayPal Holdings Inc.
PYPL,
+4.46%
62.6%
Charter Communications Inc. 48.0%
Edwards Lifesciences Corp.
EW,
+2.87%
41.9%
ServiceNow Inc.
NOW,
+3.67%
39.9%
Zoetis Inc.
ZTS,
+3.00%
39.3%
Fidelity National Information Services Inc.
FIS,
+2.03%
37.8%
Accenture PLC
ACN,
+2.00%
35.3%
Fortinet Inc.
FTNT,
+2.82%
31.5%
Estee Lauder Cos. Inc.
EL,
+1.52%
32.5%
Moderna Inc.
MRNA,
+1.34%
29.6%
Iqvia Holdings Inc.
IQV,
+2.94%
26.3%
Carrier Global Corp.
CARR,
+2.17%
22.8%
Hilton Worldwide Holdings Inc.
HLT,
+1.63%
19.2%
Broadcom Inc.
AVGO,
+2.37%
16.2%
Arista Networks Inc.
ANET,
+2.27%
15.2%
Dow Inc.
DOW,
+1.32%
10.7%
Otis Worldwide Corp.
OTIS,
+2.16%
9.2%

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Elon Musk’s Finances Complicated by Declining Wealth, Twitter Pressures

Elon Musk

‘s immense wealth and borrowing power are now being tested as the

Tesla Inc.

TSLA -1.76%

shares that have fueled his fortune have sharply declined while he rushes to stabilize his massive personal investment in Twitter Inc.

The auto maker’s share value has nosedived 18% this week alone and more than 60% since he announced his plan to buy Twitter. 

His ability to use his shares at Tesla to raise money, by selling or borrowing against them, has been complicated by their rapid downdraft in recent months.

Historically, Mr. Musk has been a cash-poor billionaire, depending upon so-called margin loans—borrowing backed up by his shares—for his personal expenses and business investments while holding on to his Tesla shares and benefiting from their rising value. 

But Tesla’s market value has fallen by about $700 billion this year, sinking his personal wealth along the way. The decline in Tesla’s valuation comes after years of growth that has allowed him to easily borrow money without having to cash out his shares. 

Shares in Tesla have fallen around 65% in 2022, dinged, in part, by the higher interest-rate environment. Another issue relates to the reason he may need cash: Twitter. Tesla investors have been concerned that Mr. Musk’s attention is divided following his October takeover of the social-media company. 

Late last year, just as Tesla’s stock price peaked, he began selling Tesla shares, totaling more than $39 billion including $3.5 billion last week. What his liquidity is like is unknown after what he said would be a more than $11 billion tax bill for 2021 and putting up roughly $25 billion in cash as part of buying Twitter. 

Mr. Musk’s current Tesla holdings, not including exercisable options, total 424 million shares worth about $52 billion at Friday’s closing price of $123.15 a share. 

Simply put, if he could tap all of those shares as collateral under Tesla’s rules, he would be allowed to borrow about $13 billion. That is only a bit more than he planned to borrow in April as part of the original Twitter deal using just 40% of his shares as collateral, underscoring how his borrowing power has shrunk with the collapse of the car company’s share price. He later scrapped those proposed margin loans to fund the deal amid investor concerns over the risk.

A Tesla launch in Bangkok earlier this month.



Photo:

Vachira Vachira/Zuma Press

Mr. Musk and Tesla didn’t respond to a request for comment. 

Tesla shares aren’t his only asset or only avenue to raise money. He also holds shares in Space Exploration and Technologies Corp., or SpaceX, and has ownership in startups such as the Boring Co. His level of personal indebtedness isn’t clear. 

Mr. Musk is facing questions about whether Tesla, where he is also chief executive, is ready for a recession as he separately tries to stem losses at Twitter, cutting thousands of workers from his newly acquired social-media platform. Late Tuesday, he said drastic spending cuts at Twitter were required as the company was on track to bleed billions of dollars. His team had been seeking additional investment dollars for Twitter. 

“We have an emergency fire drill on our hands,” Mr. Musk said during a public talk on Twitter Spaces. After taking those drastic efforts, he said, Twitter could break even next year. 

While Twitter has rarely been profitable in the past decade, its finances were made more challenging by the debt Mr. Musk took on to fund his acquisition and by a decline in spending by advertisers worried about the erratic changes occurring under his leadership. Analysts estimate the debt expenses alone have added more than $1 billion in cost annually to a company that last year generated $5 billion in sales, mostly from ads. 

Mr. Musk has been here before—mired in debt and burning cash as the global economy teeters—and emerged successfully.

Those successes and investor enthusiasm for his ventures made him rank as the world’s richest person for a time. The drop in Tesla’s value this year sent Mr. Musk’s ranking as the world’s richest man to No. 2 behind

Bernard Arnault,

the chairman and chief executive of luxury conglomerate LVMH Moët Hennessy Louis Vuitton. Mr. Musk’s fortune fell to an estimated $140 billion as of Thursday from a high of $340 billion a little more than a year ago, according to the Bloomberg Billionaires Index. 

If he needs cash, Mr. Musk could always sell more Tesla shares, as he did recently. But, in the past, Mr. Musk, Tesla’s largest individual shareholder, has been reluctant to sell. At Tesla, Mr. Musk lacks the kind of dual class of stock ownership that gives founders at

Meta Platforms Inc.

or

Alphabet Inc.

controlling power. Instead, Mr. Musk’s large stake in Tesla, in the past, has effectively given him veto power over shareholder proposals thanks to the company’s supermajority vote requirement. 

On Thursday, Mr. Musk said he sold some stock to make sure he had “powder dry…for a worst-case scenario” and said that he was done selling until probably 2025, though he’s made similar statements like that this year only to sell more. 

“I’m somewhat paranoid having gone through two really intense recessions,” Mr. Musk said. 

While he had used margin loans before, the idea of borrowing billions off the backs of Tesla shares to help Twitter carries risks. 

Tesla’s board of directors has limited his borrowing power to essentially 25 cents on every dollar of share value, according to regulatory filings. As the shares fall in value, he must comply with the 25% limit. The risk to Tesla shareholders, as the company describes in its regulatory filings, is that he may have to unload a lot of shares at once to generate cash. He has never disclosed at what price he would need to pony up more collateral.

In recent days, Mr. Musk has swatted down the idea of margin loans altogether. In a tweet, Mr. Musk cautioned that such a move was unwise in this market. “When there are macroeconomic risks, it is generally wise to avoid using margin loans on any company, as stocks may move in ways that are decoupled from their long-term potential,” he wrote on Dec. 8. 

As of the most recent public filing, Mr. Musk had pledged as collateral more than half of his Tesla holdings, excluding options he could exercise.

Pledging doesn’t necessarily indicate that actual borrowing against those shares has occurred, the filing said. 

Write to Tim Higgins at tim.higgins@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Elon Musk’s SpaceX Prepares for Starship Launch

SpaceX is gearing up for a key test of its immense rocket that is designed for commercial launches, as well as the Mars mission

Elon Musk

has long sought.

Near a beach east of Brownsville, Texas, employees at Mr. Musk’s space company are preparing for the inaugural orbital flight of Starship, the towering rocket system the company has been developing for years to one day launch into deep space. The initial test mission would last around 90 minutes, beginning with a fiery blast of the ship’s booster over the Gulf of Mexico, SpaceX has said in a regulatory filing. 

It isn’t clear when SpaceX will attempt the first flight, after dates Mr. Musk has discussed came and went. Some officials at the National Aeronautics and Space Administration, a customer for a version of Starship, previously said they thought the mission could occur in early December. 

A SpaceX Falcon 9 rocket lifted off this month with a payload of 40 satellites for OneWeb’s broadband-satellite network.



Photo:

John Raoux/Associated Press

Mr. Musk, who acquired Twitter Inc. and recently delivered Tesla Inc.’s first all-electric semitrailer trucks, has described getting Starship into orbit as one of his main goals. At SpaceX, which Mr. Musk founded in 2002 and still leads, he has said the rocket system is consuming significant resources and faces formidable technical hurdles

The company is using new engines it developed on Starship and wants to be able to quickly and rapidly reuse the vehicle, akin to how airlines operate planes. Starship is also really big: Fully stacked, it stands taller than the rocket NASA recently used on its first Artemis moon mission. 

“There’s a lot of risks associated with this first launch, so I would not say that it is likely to be successful, but I think we’ll make a lot of progress,” Mr. Musk said last year, during an appearance before a National Academies of Sciences, Engineering, and Medicine panel.  

A spokesman for Space Exploration Technologies Corp., as the company is formally called, didn’t respond to requests for comment.

SpaceX’s Starship program has encountered setbacks on shorter-altitude flights, and it isn’t clear how much it would cost if something similar happened on an orbital mission.

Japanese billionaire Yusaku Maezawa plans a journey around the moon on Starship.



Photo:

philip fong/Agence France-Presse/Getty Images

The company’s strategy of accepting potential failures, and learning from them, has helped it develop spacecraft like Falcon 9, the workhorse rocket the company used on almost 60 launches this year through mid-December, former employees said.

“It’s better to lose them now than to lose them because you left data on the table, because you were too scared to have a failure in public during the development phase,” said Abhi Tripathi, who worked in several director roles at SpaceX and currently serves as mission operations director at the University of California-Berkeley Space Sciences Laboratory.

At SpaceX, “risk taking, as long as it is safe to personnel and to property, is highly encouraged,” Mr. Tripathi said. 

Jeff Bezos

‘ space company Blue Origin LLC is also working on its own large rocket, as is United Launch Alliance, the launch company jointly owned by

Boeing Co.

BA 0.53%

and

Lockheed Martin Corp.

SpaceX’s Starbase launch site in Texas.



Photo:

ADREES LATIF/REUTERS

If it works, SpaceX’s vehicle would lower the cost to get to orbit and give the company a sophisticated new rocket system, Mr. Musk said earlier this year. If it doesn’t, the program could threaten to become a money pit for a company that already has two proven rockets—Falcon 9 and Falcon Heavy—that are partially reusable, according to space-industry analysts and executives. 

NASA is a major backer for Starship, providing deals valued at more than $4 billion to use a moon-lander version of the vehicle for Artemis exploration missions. Senior agency officials have said the company has been meeting milestones under its contract. 

Technology entrepreneur Jared Isaacman and the Japanese billionaire

Yusaku Maezawa

have both said they purchased flights using the vehicle. A Japanese satellite operator said in August that it would use Starship to deploy a company satellite. 

SHARE YOUR THOUGHTS

Will SpaceX ever send humans to Mars? Join the conversation below.

Starship is made up of a 230-foot-tall booster called Super Heavy that would power a 164-foot-tall spacecraft, also called Starship, into orbit, according to SpaceX. The latter ship is designed to carry cargo or crew, with a user’s guide touting room for up to 100 people. The spacecraft is designed to be refueled in orbit, enabling longer-distance flights, according to company and NASA presentations. 

SpaceX is spending heavily on the Starship program, according to space industry analysts. The privately held company has raised significant funds lately, selling at least $6.1 billion in stock over the past three years, according to securities filings. SpaceX recently began marketing employee shares for sale at a price that would value the company at around $140 billion.  

Mr. Musk has warned that SpaceX could face bankruptcy if a severe global recession made capital and liquidity difficult to obtain while the company was investing in Starship and Starlink, its satellite-internet business.

Technical challenges with new rockets are common. In July, the company had to deal with a fiery blast underneath one of the Super Heavy boosters, though last month SpaceX said it completed a significant engine test. SpaceX also has lost Starship prototypes. Two years ago, a Starship spacecraft flew a short-altitude test flight without a booster, but smashed into the ground when trying to land. 

In May 2021, the company landed a Starship spacecraft for the first time after another short flight.

For the first orbital test, SpaceX expects to bring the booster down in the Gulf of Mexico and land the Starship spacecraft in the Pacific Ocean, near a Hawaiian island, according to a company filing with the Federal Communications Commission. 

Jeff Thornburg, a former SpaceX propulsion executive, said the company’s biggest challenge is ensuring the Starship spacecraft can safely return to Earth. The vehicle will endure enormous stress and heat as it re-enters the atmosphere from orbit, he said, but is designed to be used quickly and repeatedly.

“Reusability brings a lot of complicated engineering, because it can’t just survive once. It’s got to survive 10, 20, 100 plus times,” he said.

After months of delays, the FAA released its long-awaited environmental assessment of SpaceX’s South Texas Starbase launch site. WSJ’s Micah Maidenberg explains what the decision means for SpaceX and the company’s Starship program going forward. Photo Illustration: Alexander Hotz/WSJ

Write to Micah Maidenberg at micah.maidenberg@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Elon Musk Seeks Additional Funds for Twitter

Elon Musk’s

team has reached out for potential fresh investment for Twitter Inc. at the same price as the original $44 billion deal, according to one shareholder who said he was contacted about the proposal.

Ross Gerber,

president and CEO at Gerber Kawasaki Wealth & Investment Management, said a representative for Mr. Musk contacted him about offering more shares Thursday.

Mr. Gerber said his firm had previously put up less than $1 million to back Mr. Musk’s takeover of Twitter, which was completed in late October at a price of $54.20 per share.

Semafor earlier reported the new outreach to investors.

Elon Musk has warned of dire financial challenges facing Twitter, the social media company he took over for $44 billion in October. WSJ’s Mark Maurer explains how the company is trying to fix its finances and avoid a potential bankruptcy. Photo Illustration: Laura Kammermann

Twitter didn’t immediately respond to a request for comment. 

Additional equity investments would likely dilute existing Twitter shareholders. The potential extent of the dilution from the latest fundraising effort couldn’t immediately be determined.

Mr. Musk this week sold more than $3.5 billion worth of

Tesla Inc.

TSLA -4.72%

stock. It was his second round of sales since buying Twitter Inc. Mr. Musk sold nearly 22 million Tesla shares over a three-day period ended Dec. 14, according to a regulatory disclosure made public Wednesday.

Mr. Musk’s ownership of Twitter has gotten off to a tumultuous start. Last month, Mr. Musk said Twitter had suffered “a massive drop in revenue” and was losing $4 million a day. He later invoked the specter of bankruptcy.

As part of the acquisition, Twitter took on around $13 billion in debt. That could leave the social-media company owing annual interest payments of more than $1 billion, analysts have estimated, compared with around $51 million in 2021.

Mr. Musk’s focus on Twitter has irritated some Tesla investors as the company tracks for its worst annual stock-price performance on record.

Mr. Gerber said he was reviewing the proposal, but had some questions about how Twitter was being run. Those include how long Mr. Musk intended to act as chief executive and any transition plan, he added. 

Last month, Mr. Musk said he expects to find someone else to run Twitter, without giving a specific timeline for when the appointment might happen. 

Twitter has been in turmoil since Elon Musk took over. To get a sense of what’s going on behind the scenes, The Wall Street Journal spoke with former Tesla and SpaceX employees to better understand how Musk leads companies. Illustration: Ryan Trefes

Mr. Gerber, who also is an investor in Mr. Musk-run electric car maker Tesla Inc., said he wasn’t concerned about how Twitter is doing so far, but said he wanted more communication. “I think they just need to be clear with everybody about what’s going on. Not just with Twitter, but Tesla,” he said.

Several Tesla investors, including Mr. Gerber, have expressed frustration recently that Mr. Musk’s involvement in Twitter might be to the detriment of the auto maker. Tesla’s stock is down more than 57% this year. 

Mr. Musk on Friday tweeted that “Tesla is executing better than ever” and that he had earlier that day gone over production progress at the company’s plant in Texas.

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

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the December 17, 2022, print edition as ‘Musk Seeks Additional Funds for Twitter.’

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Facebook Parent’s Oversight Board Criticizes ‘Cross Check’ Program That Protects VIP Users

Meta Platforms Inc. has long given unfair deference to VIP users of its Facebook and Instagram services under a program called “cross check” and has misled the public about the program, the company’s oversight board concluded in a report issued Tuesday.

The report offers the most detailed review to date of cross check, which Meta has billed as a quality-control effort to prevent moderation errors on content of heightened public interest. The oversight board took up the issue more than a year ago in the wake of a Wall Street Journal article based on internal documents that showed that cross check was plagued by favoritism, mismanagement and understaffing.

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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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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

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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