Elon Musk claims Twitter can become the most valuable company globally amid mass layoffs

Elon Musk, in an interview at an investor conference, said that Twitter can become one of the most valuable companies globally. The interview came at a time when nearly half of Twitter's staff are being let go, to cut costs to the company. "I think there is a tremendous amount of potential … and I think it could be one of the most valuable companies in the world,” said Musk during the interview, as per a report from CNN. He added that he tried to get out of the deal. 

Elon Musk has been criticised by former employees of Twitter for the way in which they have been let go. Addressing the controversy around his decision to lay off Twitter employees, Musk wrote, "Regarding Twitter’s reduction in force, unfortunately, there is no choice when the company is losing over $4M/day. Everyone exited was offered 3 months of severance, which is 50% more than legally required." Some former employees have filed a class action lawsuit against Musk for alleged violation of federal and state law. 

The WARN law

The WARN law mandates that any company with more than 75 employees must grant 60 days of notice before a mass layoff. The purpose of the law is to give laid-off employees time to figure out how to handle this disruption. Companies which violate the WARN law face a civil penalty of $500/day for each violation. Employees who have been laid off in violation of the WARN law are eligible to back pay. However, this class action lawsuit will not succeed because Musk will not expose himself to legal action. All the employees who have been laid off will receive 3 months of severance and they will technically still be employees of Twitter as there will be a non-working notice period till January and February in some cases. 

Twitter's challenges

Twitter has seldom been profitable since 2007 and compared to other social media platforms, its digital ads revenue is meagre, despite the fact that 90 percent of its revenue comes from digital ads. Musk's challenge is to increase the revenue Twitter earns by reducing unnecessary costs first and then pivoting from a platform relying on digital ads to a platform whose source of revenue is more diversified and includes subscriptions. Earlier, Musk had spoken about turning Twitter into an 'everything app', it isn't clear as of now if he will succeed.