Advertising industry titan ‘puzzled’ by Musk’s plan for Twitter

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

“I am a little puzzled,” S4 Capital founder and chairman Sir Martin Sorrell told Yahoo Finance Live at the World Economic Forum on the outlook for Twitter should Musk make the platform less reliant on ad revenue as he has suggested (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 (compared to 217 million to end last year) as he pushes more into a subscription model, according to a pitch-deck seen by the New York Times.

Elon Musk, founder, CEO and lead designer at 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 haul in $1.3 billion from a not-yet-released payments business by 2028, up from $15 million in 2023, according to Musk’s plan. Musk also aims to have 11,072 employees at Twitter by 2025 compared to about 7,500 today.

Sorrell noted that there could actually be a risk to Twitter’s ad business — however much would be left as Musk moves away from it —amid the opening up of the platform do more controversial voices.

“I didn’t quite follow the logic there,” Sorrell said. “But of course, if you have… a free speech network platform, clients are very worried about brand safety and having their advertising positioned against controversial content. So it 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 at a 27%+ revenue CAGR [compound annual growth rate] with a comparable [revenue] base,” Jefferies tech analyst Brent Thill stated in a recent note. “Musk’s reported ambitions to switch to an ad and subscription model would likely pose a significant rev headwind and make it difficult to achieve these targets.”

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

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