(Bloomberg) — As he negotiated a $44 billion deal to acquire Twitter Inc., Elon Musk told bankers that he would be focused on the social-media company’s bottom line, and floated the idea of cutting both costs and jobs, according to people familiar with the matter.
On calls with teams of bankers before the deal was announced, Musk fielded questions on how he would generate financial returns at Twitter. While nothing is set in stone — and Musk himself had no access to Twitter’s non-public financials at the time — he specifically mentioned job cuts, said the people, who asked not to be identified as the details are private. He didn’t go into details about which departments or positions might be affected, the people said.
Musk also discussed ideas to monetize the platform and boost cash flow, including potential subscription services to drive recurring revenue, they said. While he’s said little publicly about how he plans to drive growth, he suggested earlier this month that he isn’t preoccupied with money. “I don’t care about the economics at all,” Musk said at a TED conference after making his offer to buy the company.
Everyone from employees to investors in Twitter are itching to know how Musk plans to run the company, which will be privately held once his $54.20-per-share transaction closes. Besides his public tweets on the matter, the world’s richest person hasn’t shared many details of what could change, and Twitter’s management didn’t hold an investor call with the release of quarterly earnings Thursday.
In the bare bones statement announcing the deal, Musk said that he wants to make Twitter “better than ever” by “enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.” Twitter’s Chief Executive Officer Parag Agrawal told employees on Monday that it would be business as usual until the deal closes.
Musk didn’t make a similar presentation of his plans and ideas, including layoffs, to Twitter’s board, according to a person familiar with the matter. The board evaluated the deal primarily on its price, relative to Twitter’s own modeling of its future financial performance, the person added.
People briefed on the calls, which were part of Musk’s pitch to rope in financing banks, said that the billionaire made it clear he would seek financial returns from the deal. He spoke about his track record at Tesla Inc. and SpaceX as evidence that he knows how to transition companies to generate returns, one of the people said.
Musk also repeated some of the ideas he had tweeted about how to run the company. He spoke about a need for influencers and celebrities to be more active on the platform, the people said, echoing a tweet he sent this month about how music superstar Taylor Swift hadn’t posted in three months.
Representatives for Musk didn’t respond to requests for comment. A representative for Twitter declined to comment.
Musk’s offer for Twitter includes a $21 billion equity commitment. One option for raising at least a portion of that was selling some of his Tesla shares. In five separate filings Thursday, Musk disclosed that he had sold 4.4 million shares for a total of about $4 billion, based on a Bloomberg calculation. He said in a tweet, referring to Tesla by its stock symbol, “No further TSLA sales planned after today.”
Twitter said on Thursday that it made $1.2 billion in revenue in the first quarter, slightly below estimates. The 16% gain in sales was the worst pace of growth in six quarters. The numbers were impacted by the divestiture of MoPub, an ad-tech platform, and would have otherwise been 22%.
Still, Twitter’s performance is in line with reports from Snap Inc. and Meta Platforms Inc., which are grappling with lower advertising spending due to issues with supply chains, inflation and the ongoing war in Ukraine. Twitter’s shares closed at $49.11, well below Musk’s buyout offer.
(Updates with Musk Tesla share sales in 10th paragraph.)
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