Elon Musk has been criticized for $ 44 billion Twitter acquisition, but his mindset could make it easier to implement new ideas for the platform. socialaccording to a Wall Street analyst.
The acquisition is expected to boost Twitter’s shares, which have risen nearly 19% since its initial public offering in 2013, well below the 260% growth of the S&P 500 over the same period.
Meanwhile, Musk’s empire – Tesla, SpaceX, The Boring Company and Neuralink – has a track record generating massive valuations and building cutting-edge technologies.
For example, Tesla’s stock has risen more than 21,000% in the past decade and its market capitalization has surpassed $ 1 trillion, despite being the stock most under pressure from short selling.
“Twitter has tremendous potential and I will open the door to that potential,” Musk said in a letter to Twitter CEO Brett Taylor.
In an interview with Insider, Morningstar chief analyst Ali Al Maghribi listed 4 ways in which Musk could improve the value of Twitter.
place in high
Al-Maghraby explained that Musk has around 83 million followers on Twitter, and given his great success leading other companies, more users are likely to flock to the platform after the takeover.
Its popularity alone can also have a huge impact in attracting and retaining users, even if it doesn’t make any changes. But since Musk has been enthusiastic about easing content restrictions, existing users may become more engaged.
Leadership and efficiency
Musk transformed Tesla and SpaceX from start-up a leader in the automotive and aerospace industries, with SpaceX now the second most valuable unlisted company in the world, valued at $ 100 billion.
The Boring Company, a tunnel manufacturer, recently completed a round of $ 675 million in financing, valuing the company at $ 5.675 billion.
Al-Maghraby said Musk could bring the same wise leadership to Twitter.
“See what it has done with other companies, it can really bring some innovative ideas to the platform . with new features and ways to change them, it can do all of that. in efficiently, which Twitter has missed in past, “the head of Morningstar added the equity analyst in an interview with Insider “.
He added that Musk has a knack for surrounding himself with brilliant minds from various industries and offering new perspectives. Additionally, Musk will be eager to test and implement new ideas in quickly and effectively, as it did in his other companies.
data and advertising
If Musk relaxes content restrictions on Twitter, it is possible that some advertisers are no longer present on the platform. But even if some leave, Twitter will be in able to attract new advertisers by increasing the impact of ads.
Morningstar’s chief equity analyst noted that Musk, for example, may be calling for more efficient use of proprietary data collected by Twitter. This is a step that will increase advertising effectiveness and can therefore attract more advertisers, which will lead to more sales growth.
This comes when Twitter launched Twitter Blue last June, giving subscribers access to a Cancel button, customizable icons, and other features.
Musk has talked about lowering the subscription price from $ 3 to $ 2, and Al-Maghraby said it could attract new users while improving access to new features.
Musk also said that Twitter Blue users will receive a blue tick, another incentive that could lead to more subscriptions.
Al-Maghraby added that the penchant for the subscription model can raise the level of speech, because users will have the incentive to engage. in higher level conversations pay for it.
He said: “Getting Twitter subscriptions can be good for the business and can bring higher levels of engagement to people willing to pay to use the platform.”
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