- Commentators have criticized Elon Musk’s offer to buy Twitter, but there are arguments for the takeover.
- Musk has built extremely successful companies in the past and could transfer his vision to a social platform, said a Wall Street analyst.
- A senior analyst at Morningstar shares has figured out how Musk’s takeover could boost Twitter.
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According to a Wall Street analyst, Elon Musk has hit his $ 43 billion bid to buy Twitter, but his visionary business mind could streamline the introduction of new products and ideas for the social platform.
This could boost Twitter shares, which rose about 19% since the IPO in 2013 – well below the S&P 500’s 260% growth over the same period. Meanwhile, Musk’s empire – Tesla, SpaceX, Boring Company and Neuralink – has experience in achieving huge ratings and building cutting-edge technology.
For example, Tesla has gained over 21,000% in the last decade and surpassed $ 1 trillion in market capitalization, even though it is the shortest share of all time.
“Twitter has tremendous potential. I will unlock it, “Musk said in a letter to Twitter chairman Brett Taylor.
In an interview with Insider, senior stock analyst at Morningstar Ali Mogarabi outlined four ways Musk could improve Twitter.
Higher engagement
Musk has about 83 million followers on Twitter, and given his huge success leading other companies, more users are likely to flock to the platform in the event of a takeover, Mogarabi explained.
Its popularity in itself can have a significant impact on attracting and retaining people, even if it does not change. But as Musk has spoken out in favor of easing content restrictions, existing users could become more engaged.
“Engagement needs to increase, and then increasing engagement will lead to even more users and they will spend more time on the platform,” Mogarabi told Insider.
Leadership and efficiency
Musk transforms Tesla and SpaceX from newcomers to leaders in the automotive and aerospace industries, respectively. SpaceX is now the second most valuable private company with a valuation of $ 100 billion. And his tunneling company, Boring Company, has just completed a $ 675 million round of funding, valued at $ 5.675 billion.
He can bring the same visionary leadership to Twitter, Mogarabi said.
“Look at what he’s done with other companies, he can really bring some innovative ideas to the platform,” Mogarabi said. “New features, ways to change it – and it could do anything with an efficiency that Twitter lacked in the past.”
He added that Musk has the ability to surround himself with bright minds from different industries, providing new perspectives. In addition, Musk will make sure that new ideas are tested and implemented quickly and efficiently, as he has done in his other companies, Mogarabi said.
Data and advertising
If Musk eases restrictions on Twitter content, some advertisers may not stay. But even if some do leave, Musk will be able to attract new advertisers by increasing the impact of the ads.
For example, Musk may require more efficient use of first-party data that Twitter compiles, Mogarabi said. “This would increase the effectiveness of advertising, which could then attract more advertisers, which would then lead to growth at the top line.”
Subscriptions
Twitter launched its Twitter Blue service last June, giving subscribers access to a cancel button, custom icons and more. Musk spoke of lowering the price of the subscription from $ 3 to $ 2, and Mogharabi said this could lead to new users while increasing access to new features.
Musk also said Twitter Blue users will receive a blue tick, another incentive that can boost subscriptions.
Leaning on the subscription model could even raise the level of discourse, Mogarabi added, as consumers will be motivated to engage in higher-level calls if they pay.
“Getting users to subscribe to Twitter can be positive for the company and can lead to even higher levels of engagement for people who are willing to pay to use the platform,” he said.
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