Sure, but the "collapse" is terrible management here lol. Terrible, by the metric of his own inconsistent actions. To suddenly reverse the decision of accidentally laying off 80% of your workforce is hilarious.
People aren't saying the app isn't working. If you lay off all of HR will your company still run tomorrow? Of course. Lay off all of engineering will the app still run tomorrow? Of course (most likely lol).
The collapse is the implied result of all these terrible decisions. Terrible decisions which imply terrible leadership. And companies can only survive terrible leadership for so long.