Twitter could be a $10 billion bird. That’s if Elon Musk can quickly transform the struggling social media giant into a super or ‘X’ app, a process he expects his $44 billion acquisition will help accelerate.
“$10 billion is the best-case scenario if Musk succeeds with the super app based on the WeChat concept he wants to build,” Dan Ives, senior analyst at Wedbush Securities, told Nasdaq.
The three-year feat to double revenues won’t be easy, however.
“This is going to be very complex,” added Ives. “They will need to cut costs, monetize Twitter’s core app, pay off debt and generate more cash flow.”
Ross Gerber, CEO of Tesla investor Gerber Kawasaki, agreed building the X app, which Musk has also dubbed the ‘everything app,’ will face big challenges in addition to overhauling Twitter itself. For starters, WeChat, owned by China’s Tencent, is drastically different from the blue-bird logoed enterprise.
“They are not similar at all,” said Gerber. “WeChat is an operating system for commerce and communications that works like an Android [app]. Twitter is a native app for sharing news and tweets so to build a new operating system from there is really very difficult.”
Consequently, Musk will need to hire a lot of engineers who specialize on developing social media software, something that’s very different from the engineers working in the billionaire’s star enterprise, electric vehicle maker Tesla.
Will WeChat Clone Succeed in U.S.?
Some wonder if U.S. consumers want their own version of WeChat to begin with. The China Tencent-owned app provides one-stop video chatting, games, ride sharing, food delivery, banking and shopping, among other features that have seduced the Chinese).
“I don’t think everyone in America is saying ‘I need an app that does everything,’’ Gerber said. “People go to Twitter for news and information so if Twitter starts doing that really well they will succeed.”
Musk should instead concentrate on integrating Twitter’s algorithms, which prioritize tweets, into Tesla’s streaming services, which offer maps and broadcast entertainment on vehicle dashboards. For instance, a person’s Twitter account could be linked to their Tesla.
“Tesla doesn’t have a social component in its app so you could do some really cool stuff,” such as letting drivers communicate with each other, Gerber said.
Twitter could also work to boost its creator community by providing greater tools enabling them to monetize their content and/or sell their products. This could happen by adding a ‘tweet to buy’ button to help Twitter better compete with the likes of YouTube, Patreon or OnlyFans. Eventually, Twitter should also boost its e-commerce capabilities by looping in Shopify or similar services to the app.
X App Could Feature Crypto Payments
In the longer term, however, some analysts see the X app as providing value for Musk, who could offer crypto payments (such as those powered by his favorite dogecoin digital currency) in it and offer a platform for non-fungible token (NFT) trading, differentiating Twitter from rivals.
Meanwhile, the firm has more immediate challenges to deal with, notably solving its highly criticized ‘bots’ or fake account issues, which management recently moved to resolve through Twitter Blue, a subscription service that verifies users. Musk must also work to meet his goal to make the app a beacon of free speech without alienating advertisers.
“He wants free speech but the reality is companies will be advertising there,” said Jane Edmondson, who runs ETF indexing firm EQM Indexes. “Firms don’t want to advertise amid incendiary or test tweets with the N-Word [referring to racist content]. Twitter is going to want to retain advertisers now that digital spending is down so it’s going to be interesting to see how all of this works out.”
AI Powerhouse?
Edmondson sees economies of scale from lifting Twitter’s artificial intelligence (AI)’s capabilities. “Personalization is a big deal,” she added. “Twitter already does this to some extent, by allowing users to follow feeds based on their interests and preferences. This could be taken to the next level by offering users products based on their interactions.”
Eventually, people should also be able to pick a Twitter handle that offers both uncensored and/or free speech versions, helping to tackle concerns about rising hate speech on the platform and luring additional marketing dollars, analysts said.
Musk must also move to quell investor fears that the fresh acquisition will distract him from meeting Tesla’s future delivery timeline and other ambitious growth targets.
“He is juggling a lot of balls at a time when Tesla investors need him more than ever because of competition in the EV space and a recession at their door step,” added Ives. “This is coming off a choppy delivery number so every minute away from Tesla and on Twitter is a concern.”
Musk is expected to soon appoint a group of executives to run Twitter so he can focus on the automotive business.
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