Musk planning how to run Twitter and boost revenue five-fold to $26.4bn

Advertising is seen to drop to 45% of total revenue from around 90% in 2020, according to a pitch deck

Elon Musk, pictured in Cape Canaveral, Florida, plans to reshape Twitter's workforce and business strategies. Reuters

Elon Musk, who successfully bought Twitter for $44 billion, said he plans to boost the microblogging platform's revenue by five times to $26.4 billion by 2028, the New York Times reported.

The world's richest person laid out his ambitious plans for the company in a presentation to investors, a copy of which was obtained by the Times, which also included plans to reshape Twitter's workforce and business strategies.

"With all of these changes, Mr Musk anticipates he can lift Twitter’s average revenue per user — a key metric for social media companies — to $30.22 in 2028 from $24.83 last year," the Times said, referring to the document.

The Tesla and SpaceX chief executive has a track record of saying ambitious things without any clear strategy to back them up. This was also the case during and immediately after his negotiations with Twitter, with analysts noting he had not set out clear plans from running the company to boosting its financials.

But the pitch deck revealed by the Times is the first significant blueprint unveiled by Mr Musk on how he would run one of the world's biggest social media platforms.

The revelation follows Mr Musk's announcement that he had secured more than $7.1bn in new equity funding from a group of investors to help finance his Twitter takeover, which has sparked internal unrest, polarising opinion and even a change of heart from some who initially opposed the acquisition.

Eighteen investors have made commitments ranging between $850,000 and $1bn, according to a regulatory filing in the US Securities and Exchange Commission.

Mr Musk's projected revenue in six years would mean a compound annual growth rate of more than a quarter from the $5bn reported by Twitter last year. The company in its first-quarter earnings report on April 28 said net income surged to $513.3 million, a more than seven-fold increase compared to the $68m in the same period in 2021, days after it agreed to be sold to Mr Musk.

Advertising, which is crucial to Twitter's bottom line, is seen to drop to 45 per cent of total revenue from around 90 per cent in 2020, the report said.

The pitch showed that advertising would create about $12bn in revenue, with subscriptions adding nearly $10bn, by 2028.

Mr Musk also has apparent plans to integrate payments into Twitter, according to the pitch, along the lines of PayPal, which he helped bring into the mainstream. This would add some $15m in revenue next year, rising to around $1.3bn by 2028. At present, Twitter does have a shopping and tipping business, but is not significant.

The Twitter deal will add about $13bn of debt as part of Mr Musk's buyout plan, but he said he would pay that debt down as free cash flow is projected to rise to $9.4bn in 2028 from $3.2bn in 2025, the pitch said.

"Free cash flow would rise even as operating expenses and costs also rose," according to the document.

User base and workforce additions after subtractions

As of January 2022, Twitter's monthly active users are at around 439 million, according to Statista data. Mr Musk's pitch includes plans to more than double that count to around 931 million by 2028; that figure today would make it the eighth most used social media network by number of monthly active users, Statista shows.

Around a fifth of his projected number, or around 159 million, would come from from Twitter Blue, in which users pay a monthly fee of $3 for a customised Twitter experience.

Then there's Mr Musk's secretive 'X' platform, a new product that he sees to have about 108 million users by 2028. There is little that is known about the X service, but Mr Musk had hinted it could be an ad-free experience.

On Twitter's workforce, the document said Mr Musk plans to hire around 3,600 people by 2025, which would increase it by about 47 per cent to more than 11,000 from around the 7,500 the company has today.

That would, however, come at a cost, as Mr Musk is planning to slash "hundreds" of jobs before bringing in new ones, causing the jobs number to fluctuate, the Times wrote, citing a person with knowledge of the matter.

"Mr Musk is likely to shed workers as part of his takeover, before bringing on new talent in engineering, a person with knowledge of the situation said," the Times said.

Updated: May 07, 2022, 9:55 AM
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