Elon Musk has also recently expressed interest in buying Silicon Valley Bank (SVB), which went bankrupt last month, to create a digital bank. Prior to its fall, SVB held $280 billion in assets, making it the 16th largest bank in the United States.
Its acquisition by the US billionaire and the creation of a digital bank might have significant implications for the technology and banking sectors, as well as the cryptocurrency ecosystem, according to Cryptopolitan.com. This acquisition, if it materializes, might indeed allow the American multi-billionaire “to disrupt traditional banking operations and provide innovative solutions to customers who are not satisfied with the current system”.
Path “clear, but difficult”, according to Musk
At the end of March, the businessman indicated in a speech to his employees that the valuation of Twitter might reach $335 billion, if its plans to diversify into finance succeed, specifying that the path is “clear, but difficult” , according to comments reported by the Wall Street Journal. This valuation represents more than 10 times its current value estimated at approximately $27 billion. If the new boss achieves his goals, his digital bank will play in the same leagues as JPMorgan Chase & Co ($500B) and Bank of America Corp ($300B).
The key to success, the businessman told his employees, is to put the social media business at the center of users’ financial lives.
Elon Musk first attempted a breakthrough in the digital payment sector in 1999 by creating X.com, renamed PayPal. Thanks to the success of this company, the multi-billionaire had founded two other companies, Tesla and SpaceX.
“I’m going to execute the X.com game plan of 22 years ago with some improvements,” the president said at a conference last year, where he shared his ambitions for Twitter. “There is a product plan that I wrote […] in July 2000, in which I thought it would be possible to create the most valuable financial institution in the world, and we are going to execute this plan […]which surprisingly no one has managed to do,” he added.
Massive growth of Twitter
The entrepreneur is betting on massive growth for Twitter, which had 238 million users worldwide in August 2022, according to figures provided by the company, by scaling the business out of its core business, giving it will increase its value.
His vision for the future is to use Twitter to create a “super-app” that blends content, communication and commerce, similar to those offered by tech giants in China, such as Tencent Holdings’ WeChat and Alipay Ant Group.
To do this, he will have to reorganize the activity of the social network, currently in difficulty, and which represented approximately 90% of its turnover. The latter fell to $4 billion last year, compared to around $6.5 billion in 2021, following the decision of many advertisers to withdraw following changes introduced by the new owner, such as the end moderation of content published on the platform, as well as massive layoffs. On April 4, Twitter’s famous blue bird logo was replaced by a dog’s head, the emblem of Dodgecoin, a cryptocurrency promoted by Elon Musk.
“What bankers do is copy what other bankers do. If everyone jumps off a cliff, they follow. If there’s a pile of gold in the middle of a room and nobody touches it, they avoid it,” the American tycoon said in the biography titled Tesla, SpaceX, Paypal: The Entrepreneur Who Goes change the world.
It remains to be seen whether he will be able to deploy the strategy and find the necessary means to execute this plan in order to get his hands on this so-called jackpot.