How I see it from a perspective of little knowledge of finance and investments. But with a keen interest in how social media operates.Advertising has not worked very well for Twitter. Twitter has been way over-valued for the revenue/profits generated by the company. But, I guess, the stock valuation reflected perceived potential for future growth. And in the interim, it was a trusted corporation, somewhere safe to invest, and hopefully see a good RoI when Twitter eventually sorts out its business model.
It has been suggested that Twitter was ripe for a subscription model for blue check mark (BCM) holders (and free, as now, for everyone else). What I have seen suggested is that Twitter could be charging thousands of dollars (or more) per year from some of its BCM members. The likes of media corporations and large brands certainly benefit enormously from using the platform and could afford high fees. Small-time BCM holders would be charged a nominal fee (or free for the likes of charities). A subscription model along those lines would generate far, far more revenue than the $8/month Musk has introduced. There are some 400,000 BCM holders on the platform, and most of them benefit financially (reputationally) from participating there.
Twitter has very large operating costs. It has to generate income from somewhere. Advertising - by itself - is not cutting it. BCM subscription fees on top of advertising could make all the difference. But here's the rub. All of this could have be explained and rationalised in a calm and reasonable way. Although the old Twitter Board of Directors did toy with a subscription model, nothing ever came of it. But now that Twitter has been bought by Musk, a man who is untrusted and bereft of good will, charging for blue check marks has become an almost impossible sell.
Perhaps the old Board have played this brilliantly. They decided (for whatever reason) that the subscription model was not going to work and the platform would massively decrease in value over time as investors failed to realise high returns. Rather, the opposite would occur, where the value of the stock would gradually decline over the next few years. Then, in comes Musk. The Board, who must operate in the best interests of their share holders, decide that the offer was too good an opportunity to pass.
Of course it is impossible to know - in alternate reality - how Twitter would have fared if it had not been sold to Musk. But if it does now crash and burn, there will be a good argument for stating that the Board played an absolute blinder.
Because Musk is at the helm, and if there is no way for other investors to remove him, I think Twitter is now fucked. rafathegaffa83 suggested a decline over 5-10 years. If this was a brick and mortar business, that might be correct in many instances. But history of the platforms on the Net strongly indicates that the end could come very quickly. I suppose what might happen is that the platform is sold again before its value has completely crashed. But it surely will be for fraction of the price paid by Musk. Or, that would be the sensible thing to do in such a situation. But when there is a megalomaniac running the company, who knows.
The problem for Twitter is now Musk. Except for other uber c*nts, no one likes him.
https://velocitize.com/2020/12/10/scott-galloway-twitter-should-adopt-subscription-model/
