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Elon Musk's strategy for Twitter
05 May 2022 (335 views)  

Elon Musk wants to purchase 100% of Twitter and to make it into a private company. He plans to buy the entire company for $44 billion, to be funded partly (about 50%) by equity and the balance by loan. He managed to get a few investors to join him in investing in the equity but he will be the major shareholder.

He has announced some of his plans regarding the future operations of Twitter, including the following:

a) Remove the use of bots
b) Require users to be authenticated
c) Make the content moderation policy transparent

These plans will make Twitter into a social platform that promotes the free flow of information. 

What about his plans regarding the financial operations of Twitter. Although he indicates that making profit is not the primary motive, he does intend to make the business viable, especially as he has taken some other investors. 

The EPS (TTM) of Twitter is $0.28 and the PE ratio is 181.40 times. To make it into a viable business, the earnings have to increase by 10 times. 

The financial report showed that Twitter was profitable in 2018 and 2019 but suffered a loss during the pandemic in 2020 and 2021. Elon Musk needs to bring Twitter to the profit in the pre-pandemic level and increase it by 100% (my estimate).

With the change in the business operation, the revenue from advertising is expected to fall. 

How can Elon Musk makes Twitter profitable?

I read that he plans to implement two major changes:
a) Require commercial and government users to pay a modest fee to use the platform
b) Cut down the expenses.

I agree with these two strategies. I wish Elon Musk all the best. 

Note - this is just my guess about what Elon Musk's future plans are likely to be. I may be wrong. However, it is interesting to see what he will actually do, when he takes over the management of Twitter.

Tan Kin Lian


 


Elon Musk's strategy for Twitter
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Elon Musk wants to purchase 100% of Twitter and to make it into a private company. He plans to buy the entire company for $44 billion, to be funded partly (about 50%) by equity and the balance by loan. He managed to get a few investors to join him in investing in the equity but he will be the major shareholder.

He has announced some of his plans regarding the future operations of Twitter, including the following:

a) Remove the use of bots
b) Require users to be authenticated
c) Make the content moderation policy transparent

These plans will make Twitter into a social platform that promotes the free flow of information. 

What about his plans regarding the financial operations of Twitter. Although he indicates that making profit is not the primary motive, he does intend to make the business viable, especially as he has taken some other investors. 

The EPS (TTM) of Twitter is $0.28 and the PE ratio is 181.40 times. To make it into a viable business, the earnings have to increase by 10 times. 

The financial report showed that Twitter was profitable in 2018 and 2019 but suffered a loss during the pandemic in 2020 and 2021. Elon Musk needs to bring Twitter to the profit in the pre-pandemic level and increase it by 100% (my estimate).

With the change in the business operation, the revenue from advertising is expected to fall. 

How can Elon Musk makes Twitter profitable?

I read that he plans to implement two major changes:
a) Require commercial and government users to pay a modest fee to use the platform
b) Cut down the expenses.

I agree with these two strategies. I wish Elon Musk all the best. 

Note - this is just my guess about what Elon Musk's future plans are likely to be. I may be wrong. However, it is interesting to see what he will actually do, when he takes over the management of Twitter.

Tan Kin Lian