Twitter warned staff that the size of bonus payments this year was at risk because of financial difficulties, adding to belt-tightening measures tech companies are implementing during an economic downturn, The Wall Street Journal reported.
According to The Wall Street Journal, Twitter told its employees that it had “experienced significant challenges” to revenue since January. It linked those to a variety of factors, including problems in the global economy and others tied to uncertainty over Elon Musk’s $44 billion acquisition of the social-media platform, which the billionaire is trying to abandon.
Social-media businesses that rely heavily digital advertising for their sales have been among the tech companies hardest hit by the economic downturn, which has caused some companies to curtail ad spending. It has also caused several social-media companies to reassess their priorities, The Wall Street Journal reported.
The New York Times reported that Twitter warned its employees on Friday that they might receive only half of their typical annual bonuses as the social media company grapples with economic uncertainty.
According to The New York Times, Twitter, which is fighting a legal battle to complete a $44 billion sale to Elon Musk, made the announcement in an email to employees and blamed its financial performance for the potential bonus cut. When the company reported quarterly earnings last month, its revenue declined for the first time since 2020 and it swung to a net loss.
The New York Times also wrote that advertisers, who generate most of Twitter’s revenue, have been skittish as economic fears over the war in Ukraine tamp down spending and Mr. Musk’s acquisition bid generates uncertainty about the company’s future.
In an email to employees on Friday, Ned Segal, Twitter’s chief financial officer, said these challenges would probably affect the annual bonuses that they receive, with the bonus pool currently at 50 percent of what it could be if the company met its financial targets, according to two employees who received the message. The figure could fluctuate throughout the year, based on bonuses to its performance against revenue and profitability goals.
The New York Times reported that a Twitter spokesperson confirmed the accuracy of the email and declined further comment. According to The New York Times, Twitter has slowed hiring and reduced its real estate footprint.
Business Insider reported that Twitter, Meta, Alphabet, and other platforms that rely at least in part on digital advertising for revenue are grappling with a downturn in the ad market amid fears of recession.
It sounds like Twitter is just one of the social-media companies that are having trouble because of its reliance on ad revenue. Perhaps this could lead social-media companies to move away from ads – and towards features that are seen as useful and interesting to consumers.
There was a time when ads were enough to sustain revenue for the big social media companies. Today, that plan feels very outdated, especially since Apple’s Add Tracking Transparency allows people to learn exactly what data the social media apps on their phone want to grab – and to opt-out of it.