Super app with payment function
Does Musk make Twitter a Wechat clone?
By Klaus Wedekind
May 19, 2022, 6:36 p.m
Well-known analyst Ming-Chi Kuo believes that Elon Musk wants to transform Twitter into a “super app” in order to quintuple the company’s sales. The Chinese Wechat, which includes a payment service à la PayPal, is to serve as a model.
Ming-Chi Kuo is best known for his accurate predictions of upcoming Apple products. But the analyst is also very familiar with the high-tech industry. His most recent tweet is all the more interesting because it deals with Elon Musk’s plans to restructure Twitter. Kuo expects the multi-billionaire to turn the service into a Wechat-style “super app” after the proposed acquisition in order to meet his hugely lofty financial goals.
Musk: Wechat “outstanding app”
In his tweet, Kuo refers to a panel discussion in which Musk raved about Wechat. “Decrypt” quotes him as saying that it really is an “outstanding app”. If you live in China, you do almost everything with Wechat. “It’s like Twitter, plus Paypal, plus a whole bunch of other things. And all with a great […] User interface.”
Musk says there is nothing like this outside of China. Such an app “would be really useful” as it would also provide a source of income for those who produce content. Payments, whether cryptocurrency or fiat, could make “a lot of sense” from that perspective, Musk said.
“It has to happen somehow”
Such a super app does not have to be based on Twitter, said the multi-billionaire. “It might be something new, but I think this thing has to exist.” It should be a “maximum trustworthy and inclusive” platform where people can do various digital tasks and important ideas are discussed. “We just want something that’s incredibly useful and that people enjoy using. It has to happen somehow.”
Wechat is operated by Chinese Internet giant Tencent, which has expanded the chat app into a multifunctional platform. You can use it to order food or taxis, book doctor’s appointments and pay bills, among other things. The app also offers a partner or job agency, replaces Facebook and is a platform for web shops.
Kuo: “Twitter Pay could be better than Wechat Pay”
Twitter may not offer the variety of personal multimedia subscriptions like Tencent, Kuo writes. However, with Musk’s experience as a PayPal co-founder, Twitter may be able to offer subscriptions related to financial services, which would align with Tencent’s Fintech & Business Services division. According to Kuo, the group made the equivalent of around 24.5 billion euros in sales last year in this area alone.
According to Kuo, almost nobody in China can do without the payment service Wechat Pay. “Twitter Pay” has the potential to be just as good or even better through the integration of cryptocurrency, writes the analyst. A Wechat-like app or a Tencent-like business model is the most likely way to achieve Elon Musk’s financial goals with Twitter.
Musk wants to quintuple sales
According to the “New York Times”, the Tesla boss presented a plan that envisages an increase in sales from $5 billion (2021) to $26.2 billion in 2028. So far, advertising has made up the lion’s share at 90 percent, in the future it should be less than 50 percent, but according to Musk’s calculations this is still 12 billion dollars. Nearly $10 billion is said to be generated from subscriptions, with the rest coming from businesses like data licensing.
With a payment service, Musk would like to bake smaller buns first, for 2023 he is aiming for revenues of 15 million dollars, which should increase to 1.3 billion dollars by 2028. By then, he wants to more than quadruple the total number of users from the current 213 million to 913 million and increase revenue per user from $24.83 to $30.22.
104 million ad-free customers
The New York Times assumes that one of the posts Musk called X is an ad-free Twitter subscription. According to the investor presentation, there should already be 9 million customers by 2023, and 104 million in six years.
Musk had negotiated to buy Twitter for a total of $44 billion. How he intends to finance the deal is not entirely clear. He wants to borrow $13 billion and hedge it with some of his Tesla stock. He has already secured another loan of up to $6 billion and deposited Twitter shares for it. Musk also wants to get investors on board who should contribute up to $ 27 billion. He is also said to have asked Twitter shareholders with large stakes if they could keep their money in the company instead of accepting his cash offer.
As is usual with such deals, much of the debt service is borne by the company. “Bloomberg Intelligence” estimates that Twitter would have to pay up to a billion dollars annually. Last year the sum was a little over 50 million euros. This shows how urgently Twitter needs to increase its revenues if Musk takes over the company.
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