ELON Musk’s campaign to get rid of 10% of the U.S.’ 2.3 million-strong federal workforce, including all 10,000 employees in the U.S. Agency for International Development, has little historic precedent, but it does evoke memories of the world’s richest man’s 2022 takeover of social media company Twitter, now known as X.
Key Facts
- Just six months after closing his $44 billion acquisition of Twitter in October 2022, Musk told the BBC he culled the company’s headcount to 1,500, down about 80% from 7,500 employees as of the end of 2021, as noted in the company’s last annual report as a public company.
- The dramatic restructuring came as a result of firings and voluntary resignation packages as the social media company pivoted to Musk’s “extremely hardcore” culture, laid out in an all-hands email with the subject line “A Fork in the Road.”
- That’s the same subject line all federal employees got last week in their email offering voluntary buyouts, an offer about 20,000 — or 1% — of workers have taken thus far, while Musk and his allies have orchestrated the administrative leave of almost all USAID employees.
What Happened To Twitter (Now X) After Musk’s Job Cuts?
The social media company initially took a massive financial hit as its workforce shrank. Its advertising revenue in 2023, Musk’s first full year at the helm of X, declined to a reported $2.5 billion, a more than 45% decrease from Twitter’s ad sales in 2021, its final full year as a public company, causing Fidelity to write down its valuation of X to as little as $9 billion by last September, just a fifth of the sticker price Musk paid two years prior. After Musk’s takeover, the company overhauled its operations, cutting its content moderation and communications teams, and reshaped its platform, focusing on premium monthly subscriptions and algorithm-based feeds like TikTok’s.
Has Musk’s X Rebounded Since His Layoffs And Restructuring?
To a degree, yes. In recent months, X has begun to show signs of recovery. Fidelity upped its X valuation to about $13 billion in December and several major advertisers, including Amazon, are renewing their presence on the platform. X’s financials recovered in 2024 on its leaner model, as Bloomberg reports X brought in $1.2 billion in adjusted earnings last year, within striking distance of 2021’s $1.4 billion, with a much leaner staff.
Will X’s Rebound Continue?
X’s recent rebound traces back to Musk’s chummy relationship with President Donald Trump, but Musk’s activities outside of his corporate role are a big part of why the company landed in hot water in the first place. Major companies like Disney and Apple paused ads on X in late 2023 after Musk endorsed an antisemitic conspiracy theory, while others balked at the lack of content guardrails on the site.
How Messy Were Musk’s Layoffs At X?
Very. The Musk-led push to trim 6,000 positions at X, a much smaller scale than the government job cuts he hopes to oversee, brought significant legal challenges from employees—including more than 2,000 arbitration cases, after X did not pay the severance package Musk promised, and several broader lawsuits. The fate of those lawsuits has been mixed: A federal judge tossed one lawsuit accusing him of skimping on a half-billion in severance payments, while another severance-based suit was allowed to proceed in part.
Chief Critic
Musk is taking “the same Twitter playbook now with the federal government,” Shannon Liss-Riordan, an attorney representing many of the former Twitter/X employees in arbitration against their former employer, told NPR. “And he couldn’t even come up with a new subject line for the email,” Liss-Riordan continued.
News Peg
In the latest signal of institutional confidence in X, banks which helped finance Musk’s 2022 acquisition plan to sell $5.5 billion of X’s debt at 97 cents on the dollar, Bloomberg reported Wednesday.
Tangent
Government agencies do not have a similar catch-all performance metric as corporations do with the yardstick of profit, but Musk’s private sector resume shows clear evidence of operational efficiency leadership. Tesla, Musk’s most valuable company and the primary source of his wealth, grew to be an investor favorite due to its high profit margins compared to other car companies, made possible in part by its relatively lean headcount. Tesla had 141,000 employees worldwide at the end of 2023, compared to Ford’s 177,000 and General Motors’ 163,000, according to the company’s most recent proxy statements. And yet Tesla brought in $10.9 billion in net income in 2023, besting Ford’s $8.1 billion net profit and General Motors’ $10.5 billion despite the legacy automakers’ higher headcount.
Forbes Valuation
Musk is worth $400 billion, according to Forbes’ calculations, making him the world’s richest person by a roughly $150 billion margin. X accounted for less than $7 billion of his fortune as of November.
