Elon Musk is reviving the old banking dream in pursuit of Twitter’s $250 billion valuation

Key to his efforts, he said, is putting the social media company at the center of users’ financial lives. It’s a remake that goes back to the early days of his career and his first major setback at a startup called X.com, now known as PayPal..

The early success of the digital payments company gave Mr. Musk the fortune he invested in Tesla a company.,

automaker, and the rocket company SpaceX. But his ignominious end as CEO of a startup—knocked out while on a fling with his first wife—means he’s never been able to personally realize his full plan.

Now, the 51-year-old is drawing A world where Twitter users can easily send money to each other, earn interest on deposits and much more with an app. This digital model is very similar to his original vision of X.com before it merged with another similarly focused company to eventually become PayPal.

“I think it could become the largest financial institution in the world,” Musk said in March at a Morgan Stanley conference.

There, he spoke of his ambitions to diversify Twitter after revamping its faltering advertising business, which traditionally made up about 90% of its sales. Analysts say that Twitter as a payment method could significantly boost its revenue.

But as with Mr. Musk’s previous experiences in automobiles and aerospace, his aspirations face huge challenges, including entrenched players and regulatory hurdles.

PHOTOS: How Elon Musk made his fortune

So far, Twitter has only taken nascent steps into the future of payments and finance. In November, the company took one of the first steps towards becoming a payment processor, filing papers with the US Treasury Department. She now has to register for a license in every state where she plans to do business. According to a government database, Twitter has not yet registered in California.

And Mr. Musk didn’t talk much about these plans in his public discussions about his $44 billion deal to acquire Twitter in late October. Instead, he has focused on his opinion that the platform needs to do more to ensure freedom of expression.

He said Twitter revenue fell to $3 billion last year from about $5 billion in 2021 amid an advertiser decline. On top of dramatic cost cuts and layoffs, Mr. Musk has seen an exodus of workers unhappy with his new approach.

Last week, he tried to signal to remaining workers that they could benefit greatly from their collective success, rolling out an employee stock plan for the private company that he valued at nearly $20 billion. He also told them he sees a “clear, but difficult path” to more than $250 billion at some point.

That number compares with financial giants, such as JPMorgan Chase & Co. , which has a market capitalization of about $380 billion, and Bank of America corp.

, with a value of approximately $230 billion. PayPal Holdings Inc. , which is not technically a bank, is valued at approximately $85 billion.

Mr. Musk did not provide a timeline and did not respond to a request for comment.

Motivating workers with the possibility of a great pay is a familiar book that Mr. Musk uses at his other companies. In 2015, for example, he drew en masse attention from Wall Street when he claimed that Tesla, then worth about $25 billion, would be a match for Apple within a decade. a company.,

Then its value is about 700 billion dollars.

Tesla surpassed that $700 billion valuation and became the first automaker to be valued at more than $1 trillion in 2021. Since then, its valuation has fallen to around $620 billion.

As he did at Tesla, Mr. Musk is betting on Twitter’s explosive growth, mapping out a roadmap to move the company beyond its core advertising business. This is central to his case for a higher rating.

It’s a plan aimed at tapping into Twitter’s hundreds of millions of users and is inspired by the rise of apps in Asia that blend social media and digital commerce, as well as his past experience with X.com.

Founded in 1999, X.com was envisioned as a full-scale bank in which Mr. Musk wanted to consolidate users’ financial services into a single website. But what really caught the eye was the ability to send money via email between users, a huge advance at the time, and ultimately what put PayPal on the map.

“I’m going to implement the X.com game plan of 22 years ago with a few improvements,” Mr. Musk said last year at a conference, where he talked about his Twitter ambitions.

He said, “There’s a product plan that I wrote…in July 2000 where I thought it would be possible to create the most valuable financial institution in the world, and we’re going to execute on that plan…which surprisingly no one has done.”

With Twitter, he’s updating his earlier vision of online banking for the app economy, framed in terms of using the social media company to start building a so-called super app. Such an app could be a platform that is a mix of content, communication, and commerce similar to those offered by China’s tech giants, such as Tencent Holdings. Ltd.

WeChat and Alipay subsidiary of Ant Group.

“We don’t have an app as good as WeChat in China,” Musk said on a podcast last year hosted by a fan club. “My idea would be, for example, what do you think of copying WeChat?”

Those companies in China benefited from less mature banking and digital messaging systems than in the US and an exploding user base of mobile devices, which for many customers were the only access to the Internet.

“In the Alipay and WeChat model, advertising is not an important aspect of the model. The model is transactional, and it is correlation-based,” said Jason Wong, an analyst at Gartner Inc.

It’s not clear if Mr. Musk can replicate WeChat’s success outside of China. Apple’s iPhone and Alphabet ecosystems a company

Android dominates smartphones in the United States, where users also use it They are accustomed to a range of banking and messaging applications as technology and financial companies struggle to offer a myriad of digital payment systems.

However, some see great potential. Digital banking consultant Richard Crone called payments “table stakes for all super apps” and the key to increasing the monetization of active users, estimating that they could more than double Twitter’s revenue before moving on to more financial features.

“It has the potential to define a new approach to social commerce,” said Mr. Kron.

Whatever it is, Mr. Musk has pursued new approaches to space travel and electric cars, he has remained attached to X.com.

In 2017, he bought back the domain name for X.com from PayPal, saying “It has great sentimental value to me.”

— Megan Bobrowski contributed to this article.

Write to Tim Higgins at [email protected]