November 3, 2022
According to Harvard Business Review, "On average, roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry."1 In the case of Twitter's 7500 employees (as of 2021 SEC filing) that would be 2250 people at risk of a layoff. Sources within Twitter estimate that number being closer to 3700 (~50%).2
In addition to the general layoffs, rumors of a reversal of Twitter's policy of "forever"3 remote work are likely to occur. Musk told Tesla and SpaceX employees in June to return to a minimum 40 hour onsite work week.4
If we look at headcount and revenue data provided by SEC filings, we see Twitter had the most efficiency of generating revenue in 2017-2018 with a headcount of only 3372 and 3920 (3646 average). It is easy to see how Musk would look to trim around 50% of headcount. We estimate a reduction in Twitter's workforce of around 42% by layoffs. Musk is hoping to remove >6% of employees by natural attrition and weakened remote work policies to reduce costs of layoffs.
Generated yearly revenue per headcount (Twitter IPO'ed in 2013 and 2022 data is incomplete):
Y2013 - 2712 employees with $664.89M in revenue = $245,166 per employee
Y2014 - 3638 employees with $1,403.01M in revenue = $385,654 per employee
Y2015 - 3898 employees with $2,218.03M in revenue = $569,017 per employee
Y2016 - 3583 employees with $2,529.62M in revenue = $706,006 per employee
Y2017 - 3372 employees with $2,443.3M in revenue = $724,585 per employee
Y2018 - 3920 employees with $3,042.36M in revenue = $776,112 per employee
Y2019 - 4900 employees with $3,459.33M in revenue = $705,986 per employee
Y2020 - 5500 employees with $3,716.35M in revenue = $675,700 per employee
Y2021 - 7500 employees with $5,077.02M in revenue = $676,936 per employee
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Sources:
Image CNN's Elon Musk’s possible takeover of Twitter is unsettling for many Black users
1 Hardvard Business Review's Surviving M&A
2 Ars Technica's Musk to cut half of Twitter jobs and end remote work for the rest, report says
3 CNBC's Twitter tells employees they can work from home ‘forever’
4 The New York Times' Elon Musk to Workers: Spend 40 Hours in the Office, or Else
