Twitter shares have tumbled amid reports Elon Musk plans to cut nearly three-quarters of the company's workforce if he takes over.
Key points:
- Twitter shares were down almost 5 per cent on Friday local time
- One investment firm says Elon Musk's proposed workforce cuts are "too aggressive"
- Other social media companies, including Meta and Snap, also saw shares drop
Mr Musk told prospective investors in his Twitter purchase he would cut back to a skeleton crew, according to The Washington Post.
Twitter shares fell $US2.55, or almost 5 per cent, to close Friday at $US49.89.
Dan Ives, an analyst at investment firm Wedbush, said in a client note that Twitter was due for some job cuts, but the reported figure went too far.
"Musk cannot cut his way to growth with Twitter and a number in the 75 per cent zip code would be way too aggressive in our opinion out of the gates," he wrote.
A Delaware judge has given Musk and Twitter until October 28 to work out details of the proposed $US44 billion deal. If no deal is reached, there will be a trial in November.
Social media shares take a hit
Elsewhere in the sector, Snap's stock slid by nearly a third after the company behind Snapchat gave a lacklustre forecast for the fourth quarter and its third-quarter revenue missed Wall Street's view.
Snap reported third-quarter revenue of $US1.13 billion, below the $US1.15 billion that analysts polled by Zacks Investment Research expected.
A JP Morgan analyst note said Snap was experiencing weaker demand due to macro pressures, platform policy changes and competition.
"We appreciate management's efforts to control what they can — cutting costs and doubling down on more resilient performance-based ads — but trends remain choppy, and the macro backdrop is likely even tougher into 2023," it said.
Also in the mix are concerns about the way social media platforms are being used in the US mid-term elections.
Platforms like Twitter, TikTok, Facebook and YouTube say they've expanded their work to detect and stop harmful claims that could suppress the vote or even lead to violent confrontations.
In 2020, then-US president Donald Trump used social media to spread lies about the election he lost to Joe Biden, helping fuel an insurrection at the US Capitol.
Shares of Meta Platforms, parent company of Facebook, fell 1.2 per cent.
The flurry of news weighed on others in the sector as well, including Pinterest, which ended down 6.4 per cent.
AP