Musk "drew a big pie" for Twitter: 4 times in 7 years, and the scale of users exceeded 900 million

As a "novice" in managing social media, Tesla CEO Elon Musk still shows the same ambition as ever.

On May 6, local time, the New York Times announced some of the financing plans submitted by Musk to investors, which listed the operating plans and financial goals that Musk had set for the presumptive. The New York Times described the targets as "even unbelievable."

In Musk's planning, 2028 is an important time node. He said twitter's annual revenue will rise to $26.4 billion in 2028, an increase of more than 400% from $5.08 billion in 2021; the number of users will reach 931 million, an increase of more than 700 million from 217 million at the end of 2021; and the single-user contribution revenue will reach $30.22, an increase of $5.39 from $24.83 in 2021.

While these goals are "incredible," the content of the plan is in line with Musk's past criticism of Twitter.

Drastically reduce reliance on advertising

According to the proposal, of the $26.4 billion in revenue in 2028, advertising revenue will be $12 billion, down to 45%, while subscription revenue will reach $10 billion, and the remaining $4.4 billion in revenue will be contributed by businesses such as data licensing.

This revenue distribution is also in line with Musk's long-standing advocacy of "reducing dependence on advertisers."

As can be seen from Musk's past tweets, he has always opposed advertisers' dominance of the platform. He believes that without relying on advertising, you can not be trapped by advertisers, and you can maintain true independence and objectivity.

However, it is not difficult to find from Twitter's past financial data that advertising revenue has always occupied an absolute dominant position in Twitter revenue.

In 2021, Twitter achieved revenue of $5.08 billion, of which advertising revenue was about $4.5 billion, accounting for 89%. In 2020, this figure is also as high as 90%.

Twitter revenue comparison between different business segments, blue for advertising revenue, source: Statista database

Previously, many analysts said that for Musk's Twitter, it is inevitable to reduce its dependence on advertising, because Musk's claim of "absolute freedom of speech" is bound to lead to a large number of financial owners leaving the platform. In the past two years, many social media platforms, including Facebook and Instagram, have encountered brands canceling advertising due to speech problems.

However, between Twitter's high dependence on advertising revenue for many years, many analysts said that they are not optimistic about reducing the proportion of advertising.

Increase subscription revenue, payment services, and more

Reducing a company's share of advertising revenue from 90% to less than half is obviously a drastic change. Musk's plan is to fill the holes left by the cuts in advertising with "subscription revenue" and "payment services".

Twitter Blue, a paid subscription service that Twitter launched just last year, has been in Musk's spotlight.

Twitter Blue is Twitter's first paid subscription service, and users who subscribe on a monthly basis can enjoy advanced features such as revoking tweets and customizing app icons.

Before buying Twitter, Musk had repeatedly proposed various improvements to "Twitter Blue", including price reductions (currently $2.99 per month), prepayment of annual fees (currently monthly payments), display of "certification marks", acceptance of local currency and virtual currency payments, and so on.

In Musk's latest plan, the number of users of "Twitter Blue" will reach 69 million in 2025, and by 2028, this number will reach 159 million, accounting for more than 17% of the total number of 931 million users.

In addition, payment services will also become one of Twitter's main sources of revenue. Musk said in his plan that by 2028, Twitter's payment service will achieve $1.3 billion in revenue.

At present, Twitter's payment service only covers tips, shopping, etc., and the proportion of revenue is almost negligible. The New York Times speculated that between Musk's successful experience in PayPal, Twitter may build its own ability to pay in the future. In other words, it is not impossible for a "Twitter payment" to appear in the future.

In addition, the proposal describes a mysterious subscription service called "X", which will go live in 2023 and is expected to have 9 million users in 2023 and 104 million users by 2028.

In addition to the business model outlook, the plan also reveals the problem of layoffs that are of great concern to the outside world. According to the proposal, Twitter will have 11,072 employees by 2025, and the current number of employees is about 7,500. Interestingly, Musk has planned for a change in the number of employees in the next few years: the number of employees will increase to 9225 in 2022, and then reduce the number of employees to 8332 in 2023, and then increase again.

For Musk's acquisition of Twitter, there are many singers among the audience, and many analysts believe that Twitter, which has lost money for many years, has become a "mess" that cannot be supported. But whether he is running Tesla or managing SpaceX, Musk has always shown his extraordinary vision, and perhaps in the future, Twitter will also become Musk's eye-catching "masterpiece".

Twitter's net profit 2010-2021, source: Statista database