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Elon Musk, shown attending the opening of the Tesla factory in Gruenheide, Germany, in March, clinched a deal to acquire Twitter Inc. for US$44-billion earlier this week.Patrick Pleul/The Associated Press

Elon Musk is a publicity-loving, smack-talking billionaire with a fraternity boy’s sense of humour and a libertarian’s belief in free speech.

But none of that means his US$44-billion bid for Twitter Inc. is about ego or a political agenda or a desire to tweak the woke crowd. Despite what conventional wisdom asserts, his bold takeover bid could simply be a smart business move.

Seen from the right angle, Twitter is an undervalued gem. It has become a vital forum – maybe, the vital forum – for politicians, activists, journalists and academics in search of a broader audience. Yet it has failed to consistently generate profits despite its cultural importance.

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This is distinctly odd. But understandable, really, given the weird personality-driven dynamics of Silicon Valley.

For years, Twitter was overseen – barely – by Jack Dorsey, a bearded meditation enthusiast who may be even odder than the eccentric Mr. Musk. On earnings calls, Mr. Dorsey reserved his passion for his main squeeze, Square (now renamed Block Inc.), a fast-growing digital-payments company. His relative lack of ambition for Twitter was evident in the company’s perennially disappointing results.

A firmer hand at the controls could mean a better Twitter, one that consistently makes money while offering its users an improved experience.

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Granted, Mr. Musk has a lot of heavy lifting to do before he will see a penny of return on his investment. Twitter’s revenue for the past fiscal year stood at US$5-billion, so Mr. Musk’s bid values it at roughly nine times sales. By comparison, Meta Platforms Inc., the parent company of Facebook, sells for only 4.5 times sales. Judged solely on the basis of that simple metric, Mr. Musk is paying at least double what Twitter is worth.

But he has some powerful levers to pull. Chief among them would be turning Twitter into a subscription business.

Scott Galloway, a veteran tech investor with a few million dollars in Twitter stock, laid out the case for this transformation in a New York Magazine article early last year, and much of his logic still holds.

“At the heart of my proposed revamp is a subscription model that charges accounts with followers over a certain threshold,” he wrote.

A strong move in this direction would have several advantages. First, it would generate cash. Second, it would re-orient the business around the needs of users, instead of advertisers. Third, it could reduce the stream of bile and bot-generated nonsense that now flows on the platform by forcing people to register under their – gasp – real names.

How successful would a subscription model be in purely financial terms? That is difficult to say, especially in the short term.

Last year, shortly after Mr. Galloway’s article appeared, Twitter tiptoed into the subscription world by introducing Blue, a service that offers a few extra features for US$2.99 a month. Take-up has been less than overwhelming.

Subscription and other revenue amounted to only US$94-million in the most recent quarter, compared to US$1.1-billion from advertising. But that probably reflects the rather lacklustre features of Blue rather than any inherent problems with converting users to subscribers.

Done right, a model that charges heavy users a modest annual subscription could deliver a host of benefits both to Mr. Musk and to the platform in general. The catch is that it could take time to implement such a shift. For a public company, under pressure from shareholders to deliver immediate results, the transition pains would be difficult to stomach. However, for a private company, under the control of an investor with a long-term perspective, it makes all sorts of sense.

Mr. Musk is just that type of investor. He made a fortune from his early involvement with PayPal Holdings Inc., the online-payments company. He then moved into commercial space flight with SpaceX, before branching into electric cars with Tesla Inc. Say what you will about the guy, but he has a history of betting on long shots and making them work.

By comparison with his past ventures, managing a turnaround at Twitter doesn’t look so daunting. Despite its history of tepid management, its revenue has doubled over the past five years. Just last year, its stock was selling for north of US$75 a share, well above the US$54.20 that Mr. Musk is paying.

The potential is there. Mr. Musk could tap it by moving to a subscription model and tweaking the company’s algorithm and features so that the platform reliably favours more thoughtful takes instead of outrage and instant slapdowns. He could also turn Twitter into a forum for commerce by allowing creators to sell newsletters, videos and books through the platform, instead of forcing them to turn to outsiders such as Substack.

For now, many skeptics believe Mr. Musk will walk away from his bid after realizing the infernal complexity of managing a political free-for-all such as Twitter.

Sure, that’s possible. But not even someone as eccentric and rich as Mr. Musk marshals a US$44-billion bid without having some type of plan. Skeptics may instead want to contemplate a future where Mr. Musk not only goes ahead with his Twitter takeover but actually improves the site and makes money in the process.

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