Ad industry titan ‘intrigued’ by Musk’s plan for Twitter

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DAVOS, Switzerland — Add another veteran CEO to the list who is rather unsure of what Tesla CEO Elon Musk has planned for Twitter, should the world’s richest man make the deal for the platform of social media.

“I’m a little puzzled,” S4 Capital founder and chairman Sir Martin Sorrell told Yahoo Finance Live during the World Economic Forum about Twitter’s prospects if Musk makes the platform less reliant on ad revenue, like he suggested it (full interview above).

Musk has a vision to quintuple Twitter’s sales to $26.4 billion by 2028 on a user base of 931 million (up from 217 million at the end of last year) as he pushes further towards a subscription model, according to a pitch deck seen by the New York Times.

Elon Musk, founder, CEO and lead designer of SpaceX and co-founder of Tesla, checks out the SpaceX Hyperloop Pod Competition II in Hawthorne, California, U.S., August 27, 2017. REUTERS/Mike Blake

Twitter would bring in $1.3 billion from as-yet-unpublished payment activity by 2028, up from $15 million in 2023, according to Musk’s plan. Musk also aims to have 11,072 employees on Twitter by 2025, up from around 7,500 today.

Sorrell noted that there could actually be a risk to Twitter’s ad business — although a lot will remain as Musk moves away from it — amid the platform’s opening, more controversial voices.

“I didn’t quite follow the logic there,” Sorrell said. “But of course if you have…a free speech network platform, customers are very concerned about brand safety and having their advertising positioned against controversial content. So that will make advertisers more concerned about a platform that is more open and less controlled or less editorially controlled than it should be.”

Some on Wall Street are also questioning Musk’s math.

“We note that Twitter has never grown to a revenue CAGR of more than 27% [compound annual growth rate] with a comparable [revenue] base,” Jefferies technical analyst Brent Thill said in a recent note. “Musk’s reported ambitions to move to an ad-and-subscription model would likely pose a significant headwind and make it difficult to achieve these goals.

More Yahoo Finance coverage of WEF 2022:

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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