Behind Elon Musk’s gamble to turn Twitter Inc into a more than $250 billion company lies a cherished idea that he has latched onto for more than two decades: digital banking.
The billionaire entrepreneur has talked in dribs and dribs about what Twitter 2.0 might finally look like under his control. But late last week, he told employees just how grand his plans are, telling them he envisions Twitter to be worth more than 10 times its current value of $20 billion.
Key to his effort, he has said, is placing the social-media company at the center of users’ financial lives. It is a remake that recounts the early days of his professional career and his first major corporate setback at a startup called X.com, now known as PayPal.
The digital-payments company’s early success has earned Mr Musk fortunes in carmaker Tesla Inc and rocket company SpaceX. But his ignominious end as CEO of a startup—a falling out with his first wife while on a trip—meant that he was never able to personally complete his plan.
Now, the 51-year-old is envisioning a world where Twitter users can send money to each other through one app, earn interest on deposits and much more. That digital ideal is very similar to his original vision for X.com, before it merged with another similarly focused firm and eventually became PayPal.
“I think it is possible to become the largest financial institution in the world,” Mr. Musk said at a Morgan Stanley conference in March.
There, he talked about his ambitions to diversify Twitter after reviving its struggling advertising business, which traditionally accounts for about 90% of its sales. Analysts say it’s possible Twitter could dramatically increase its revenue as a payments vehicle.
But with Mr Musk’s previous experiences in automotive and aerospace, his aspirations face huge challenges, including the players involved and regulatory hurdles.
So far, Twitter has taken only initial steps towards a payments and finance future. In November, the company took the first step toward becoming a payments processor, filing paperwork with the US Treasury. It must now register for a license in each state where it plans to do business. According to government databases, Twitter is not yet registered in California.
And Mr. Musk hasn’t talked much about these plans in the public discussions surrounding his $44 billion deal to acquire Twitter in late October. Rather, he has focused on his view that the platform needs to do more to ensure free speech.
Twitter’s revenue fell to $3 billion last year, she said, from about $5 billion in 2021 amid an advertiser pullback. In addition to dramatic cost-cutting and layoffs, Mr. Musk has seen an exodus of workers unhappy with his new approach.
Last week, he tried to signal to remaining workers that they could greatly benefit from their collective success by launching an employee stock plan for the private company, which is worth about $20 billion. He also told them that he sees a “clear, but difficult, path” to being worth more than $250 billion at some point.
That number compares favorably with financial giants like JPMorgan Chase & Co., which has a market value of about $380 billion, and Bank of America Corp., which is worth about $230 billion. PayPal Holdings Inc., which is not technically a bank, is valued at approximately $85 billion.
Mr Musk did not give a timeline and did not respond to a request for comment.
Motivating employees with the prospect of a big pay day is a familiar playbook Mr. Musk uses at his other companies. For example, in 2015, he drew some collective eyeballs from Wall Street when he claimed that Tesla, then worth about $25 billion, would overtake Apple Inc. in a decade’s time. Will go beyond , which was worth about 700 billion dollars.
Tesla surpasses that $700 billion valuation and becomes the first auto maker to be worth more than $1 trillion in 2021. Since then, its valuation has fallen to around $620 billion.
As he did at Tesla, Mr Musk is betting big on growth at Twitter, laying out a road map for moving the company beyond its core advertising business. This is central to his case for a higher valuation.
It’s a plan that aims to take advantage of Twitter’s hundreds of millions of users and is driven by the emergence of apps in Asia that combine social media and digital commerce, as well as their prior experience with X.com.
Founded in 1999, X.com was envisioned as a broad-spectrum bank in which Mr. Musk wanted to consolidate users’ financial services into one website. But what really caught attention was the ability to email money between users, a breakthrough for the time, and ultimately putting PayPal on the map.
“In the Alipay and WeChat models, advertising is not an important aspect of the model,” said Jason Wong, an analyst at Gartner Inc. “The model is based on transactions, based on engagement.”
It’s unclear whether Mr. Musk can replicate WeChat’s success outside China. The ecosystems of Apple’s iPhone and Alphabet Inc’s Android Smartphones dominate the U.S., where users are accustomed to a range of banking and messaging apps as tech and financial companies battle to offer myriad digital-payment systems.
Still, some see huge potential. Richard Crone, a digital-banking consultant, calls payments “table stakes for all super apps” and the key to increasing monetization of active users, estimating that it will drive Twitter’s revenue before moving on to more finance features. can more than double.
“They have the potential to define a new socio-commerce approach,” Mr. Krone said.
Whatever the case may be, as Mr. Musk pursues new visions for space travel and electric cars, he’s staying connected to X.com.