Twitter is already under pressure as Musk closes in

Details: Inside Twitter, employees told Axios that despite best efforts to operate business as usual, the takeover saga has made it challenging to discuss long-term deals with clients and vendors.

• “People are just exhausted,” a Twitter employee told Axios. “It can be conflicting because as a shareholder you’re happy but as an employee, there's a lot of uncertainty.”
• The drama is weighing on morale, especially in light of a recent report from The Washington Post suggesting Musk plans to cut up to 75% of the company's workforce.

Between the lines: Former employees say the company's business struggles have been exacerbated by years of corporate turnover and indecision.

• "I just think it's become a place where there is a lack of investment in consistent leadership," said Leslie Miley, a former engineering manager, in the latest podcast episode of How it Happened: Elon Musk vs Twitter. "The organization has probably damaged its ability to become a more refined product."

Driving the news: Snapchat's earnings call last week sent shockwaves through the social media industry, after the tech giant said it saw a pullback last quarter on brand ad spending, or ads that tout a company's reputation rather than trying to sell a product directly.

• Twitter's business is much more heavily weighted towards brand ads than almost any other social media platform, with roughly 85% of its advertising business going towards brand ads.
• While the company still hasn't stated whether it will publish an earnings report for the third quarter, it's safe to assume that its current share price doesn't reflect the havoc that the economy is likely wreaking on its ads business.

Between the lines: The tech giant has pushed to diversify its revenue in recent months with subscriptions. But those products, like Twitter Blue and Super Follows, haven't gained significant traction.

• According to app analysis firm Apptopia, there has been just $650,000 worth of in-app payments on Twitter across iOS and Android since October 2021. Twitter Blue, its subscription service, launched in the U.S. in November 2021.
• By comparison, Snap said last week that its subscription service, Snapchat+, had over 1.5 million paying subscribers last quarter. (Pricing varies by country, but in the U.S. — where a source says most of those subscriptions are currently sold — the subscription costs $4.)

Yes, but: Monthly downloads to Twitter have remained consistent over the past year, per Apptopia, and the company says it has continue to grow its user base this year, even after record pandemic growth.

• Still, Twitter's competitors are continuing to grow much faster. Twitter currently has, on average, 237.8 million daily active users, while Snapchat has 363 million.

What to watch: Reports suggest Elon Musk could be looking to overhaul Twitter's workforce to bend the company to meet his vision. While some analysts are bullish on Musk's ability to recruit great talent, there's no question that transforming Twitter's business will be a huge uphill battle.

• "I mean, you've got one of the most innovative product people worth more money than anyone else on planet earth. I think the idea of great talent wanting to work at Twitter would be phenomenal for Twitter," said LightShed Partners' Rich Greenfield.
• "I think he actually has some very good strategies for improving Twitter, hiring great AI and engineers, and you know — from a machine learning standpoint — helping deal with some of the bot problems."

What's next: The official deal is expected to close October 28th, but uncertainty remains.