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Key Takeaways

  • The Washington Post reported that Elon Musk plans to lay off roughly 5,000 employees if the Twitter acquisition continues.
  • The Twitter deal initially fell through in the summer, but it was revived when the company took Elon Musk to court, and he was given a deadline to close the deal if he wanted to avoid trial.
  • Tesla investors are concerned about how this Twitter purchase would impact Elon Musk’s ability to stay focused on Tesla.

You’ve likely heard about Elon Musk purchasing Twitter, and all of the various twists and turns therein. It’s now officially confirmed that Elon Musk has until 5 p.m. ET on Friday, October 28, 2022, to close the Twitter acquisition, or a trial date will be set. Many experts believe that this trial would be an uphill battle that Musk would eventually lose.

Even the most optimistic Muskers among us have expressed doubt that this buyout could ever going through. However, Musk himself has commented on the Twitter purchase, saying that he intends to close the deal by Friday, a deadline imposed by a Delaware judge. Let’s look at everything that’s going on with Musk’s Twitter acquisition and the alleged Twitter layoffs to come.

The story behind Elon Musk’s Twitter layoffs

On October 20, The Washington Post reported that Elon Musk told potential investors that he would lay off about 75% of Twitter’s workforce. According to the documents, this would mean that Twitter’s workforce would drop from 7,500 employees to a staff of just over 2,000. This would be a significant reduction in the workforce that has left many employees unnerved as they worry it would hurt the company’s ability to operate correctly.

The only public acknowledgment that Musk has made thus far about laying off employees was during a town hall meeting in June, where he pointed out that he didn’t see why low performers should remain employed with the company. The general sentiment was that Twitter employees weren’t too happy with the town hall. Some even had difficulty hearing Musk as he appeared to be conferencing from a hotel room.

Twitter employees have now responded to this information about the possible layoffs. The Twitter staff penned a coordinated letter to Musk and the Twitter board about this concerning news, expressing that they feel the cuts would hurt Twitter’s ability to serve the public conversation. The letter included a demand from employees not to be treated as pawns in a game for billionaires. We will continue to monitor any additional comments that come out on the topic of layoffs.

It’s worth noting that, according to the Washington Post, the current management of Twitter was already planning on cutting payroll by roughly $800 million by the end of 2023, which would be equivalent to some 25% of the workforce. So even if Musk’s Twitter deal doesn’t go through as planned, there are still legitimate fears of a deep layoff. There’s no telling how any company will perform in the coming months as fears of a global recession continue to loom over us.

What’s the latest on the Twitter acquisition?

Elon Musk commented on the Twitter acquisition during the Q3 earnings call for Tesla by saying, “I think it’s an asset that has sort of languished for a long time but has incredible potential.” Musk has also made vague remarks about how Twitter would help him with X, his idea for an app for everything.

Musk originally announced that he was purchasing Twitter in April, only to back out of the deal over the summer. This was until a Deleware judge ruled that Musk had to close the deal to avoid going to trial.

It was then reported that on October 24th, Musk pledged to his co-investors in the deal that he intended to complete the transaction by the deadline. Musk has promised to provide $46.5 billion in equity and debt financing for this buyout. This figure includes the $44 billion price of the social media platform and additional funds for closing costs.

Musk is obtaining financing from equity investors and banks by selling off Tesla stock. It’s being reported that the banks committed to funding this buyout have already finalized the debt financing documents.

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Among the banks involved are Morgan Stanley and Bank of America. The banks have committed to providing $13 billion in debt financing. Equity investors, including Larry Ellison (Oracle Corp. co-founder), Sequoia Capital, Binance, and Qatar Investment Authority, will be committing $7.1 billion towards the buyout. We must stress that neither side has confirmed this report yet.

With this recent information about the financing, it seems increasingly possible the Elon Musk Twitter acquisition could finally happen.

What else do you need to know about the Twitter acquisition?

There are many layers to this Twitter acquisition. The US government is now considering conducting a national security review of the Twitter deal. Musk plans on purchasing Twitter for $44 billion with foreign investors’ financial assistance, including Saudi Arabia’s Prince Alwaleed bin Talal and Binance Holdings. Officials are still looking at which tools they could implement to prevent the acquisition. Presidents have squashed deals on the guidance of the Committee on Foreign Investment (CFIUS) in the past. CFIUS is responsible for reviewing foreign takeovers of American companies.

Biden officials were also apparently worried about Musk’s controversial peace plan for the Russian conflict with Ukraine. This is certainly an interesting twist that nobody saw coming, which led to yet another contradictory report.

When asked about the national security review, the press secretary for the White House, Karine Jean-Pierre, declined these reports. Jean-Pierre chose not to comment on the relationship between the U.S. government and Elon Musk. Still, she stated that the national security story wasn’t true. We’re going to have to wait to see if the government intervenes in this transaction or not. If the Biden administration gets involved in the buyout, this entire process could drag out for much longer than anticipated.

What does this mean for Tesla?

Even though most of these reports focus on Twitter, there are worries over how this acquisition would impact Tesla. Some have estimated Musk would have to sell between $5 billion and $10 billion in Tesla stock to come up with his end of the financing. There are fears that this could negatively impact the Tesla stock price during a challenging time. The company recently experienced some swings due to a slight miss in their earnings report, and concerns about a global recession will undoubtedly impact the demand for electric vehicles.

There are also concerns from Tesla investors that Musk would only further dilute his focus on his core business if he were to take on an active role in this Twitter purchase. Musk hasn’t stated his plan for a management team at Twitter, so this naturally has investors on both sides worried. If Musk were to become an active CEO of Twitter, many would worry about his ability to stay focused on Tesla.

How should you be investing?

The stock market has been volatile lately with everything happening in the world. Some of the biggest factors are aggressive rate hikes as part of the battle against soaring inflation. With all of this happening, right now is a risky time to be investing in individual stocks.

That’s why we created our AI-powered Emerging Tech Kit, so that you don’t have to track individual stocks in order to invest in this sector. Instead, this kit uses sophisticated algorithms to predict which assets will perform best in the coming week and then weights the portfolio in line with those projections.

Bottom Line

The deadline is within reach, and we’ll see how this Elon Musk and Twitter situation plays out in the coming days. Will Elon Musk officially take over Twitter on Friday, or will there be another twist in this story? We’ll know soon enough.

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