TECH NEWS – Dream or reality? Elon Musk wants a $1 trillion market share for the platform X…

 

 

It’s no secret that Elon Musk wants the X social media platform to succeed. After all, he was forced to buy the platform at a notoriously inflated price, for which he received numerous comments from detractors. However, Musk’s recently unveiled lofty ambitions for X may prove too ambitious even for the famously ambitious CEO.

Elon Musk has now tweeted that the $1 trillion market capitalisation of the X platform remains a feasible achievement. First of all, Elon Musk’s reference to the market capitalisation of X suggests that he eventually wants to take the platform public again.

But more importantly, it raises the question of whether this feat has a realistic likelihood of success. As Tesla perma-bull Gary Black explained in the above tweet, to reach a market capitalisation of $1 trillion, X would need to trade at a 40x 2023 enterprise value (EV) to revenue (revenue) multiple.

However, no social media company currently trades at such high multiples; even Google only has an enterprise value to revenue multiple of 6.3x.

Elon Musk, of course, wants to transform X into an “all-in-one app”. But here again, the odds are against the desired outcome. Consider that Tencent – the company behind the WeChat super-app – traded at an average EV/Revenue multiple of just 6.7x between 2018 and 2022.

Elon Musk recently announced that the number of monthly users of X will reach a new peak in 2023. It exceeded 541 million users. The Tesla CEO seemed quite jubilant about the development. Especially that it comes after “removing a lot of bots”. Just for comparison, X’s active monthly users averaged just 368 million in 2022.

In a recent interview, the world’s richest man said that he is working on a 22-year plan to transform X into the world’s most valuable financial institution.

Do you think Musk is being pragmatic when he sets his sights on a $1 trillion valuation for the X platform? Or is he setting himself yet another unattainable goal from which he will eventually back out?

Source: X

$1T would be 40x 2023E revenue. No social media stock trades at 40x EV/Rev.
2023E EV/Rev:
– GOOG 6.3x
– META 5.6x
– SNAP 3.5x
– PINS 5.4x
– YELP 2.0x
– BIDU 1.8x
– TCEHY 4.7x
With even $5B rev (2x 2023E Rev) TWTR EV would be ~$30B at 6x Rev, less whatever debt remains.

— Gary Black (@garyblack00) August 23, 2023