Twitter Partners With eToro To Offer Stocks, Crypto Trading – Forbes Advisor

Twitter has announced a partnership with crypto exchange eToro to allow users to trade stocks, cryptocurrencies and other assets on the social network’s platform.

The deal comes hot on the heels of Twitter CEO Elon Musk merging Twitter into a shell company called X Corp., which he says he wants to turn into an “everything app.”

Musk’s inspiration for X as an everything app appears to be Tencent’s WeChat. It is a Chinese social media giant that is one of the largest technology companies in the world.

Turns Twitter into an Alt app

The WeChat app acts as an all-in-one service, with features that include messaging and video chat, video games, photo sharing, ride services, food delivery, banking and shopping.

“It does everything — kind of like Twitter, plus PayPal, plus a whole bunch of things, and all rolled into one, with a great interface,” Musk said. “It’s really an excellent app and we don’t have anything like it outside of China.”

Until now, that is, and only if the mercurial Musk can start executing his vision for trading on Twitter via eToro. An expansion of this magnitude may not be possible for a company that was unable to pay its headquarters rent just a few months ago.

Ric Edelman, financial advisor and best-selling author, likes what he sees in the Twitter-eToro marriage.

“This is further evidence that crypto is becoming increasingly mainstream,” said Edelman, founder of the Digital Assets Council of Financial Professionals. “eToro and Twitter are both powerful organizations and their partnership will cause their competitors to quickly form their own partnerships. The snowballing will become unstoppable, and with it greater commitment from consumers and investors.”

Still, for some financial advisors, turning Twitter/X into a securities trading platform raises potential red flags.

The main concern of WealthAbility CEO Tom Wheelwright is the potential lack of financial education material offered by the platform and people making uninformed investment decisions.

“The biggest concern is people making decisions based on tweets or other social media,” said. “Note that the IRS recently added ‘social media tax advice’ to its ‘dirty dozen’ list. It’s certainly handy, and it makes sense to have a ‘super app.’

Wheelwright, who was also a contributor to Robert Kiyosaki’s “Rich Dad Success Stories” book, referred to the Internal Revenue Service’s annual Dirty Dozen list of common scams that often ensnare taxpayers.

Elon Musk’s grand strategy for X

Musk bought Twitter for $44 billion at the end of 2022. He is also CEO of SpaceX – formally known as Space Exploration and Technologies Corp – CEO of car manufacturer Tesla, founder of the Boring Company and co-founder of Neuralink and OpenAI.

The polymath Musk may have had a vision of expanding Twitter for some time. He tweeted in October 2022 that the Twitter acquisition was “an accelerator to create X, the alt app.”

Buying Twitter is an accelerator to create X, the alt app

— Elon Musk (@elonmusk) 4 October 2022

Musk said at a Morgan Stanley conference last month that he wants Twitter “to become the largest financial institution in the world.”

Musk added that he wanted X to become a peer-to-peer mobile payment platform where users can earn interest on their money like in a bank. In the past, he has suggested that he wants his app to offer additional services such as travel couriers and food delivery.

On Thursday, eToro said its game plan includes allowing users to access real-time prices of assets, including cryptocurrencies and stocks, and to facilitate trading in those instruments.

Trade data will be available via Twitter’s Cashtags feature. Introduced in 2012, Cashtags allow users to interact with content around an asset by inserting a dollar sign in front of the ticker.

A successful remake of Twitter/X could help Musk alchemize his Twitter investment from dross to gold. Twitter is reportedly valued internally at $20 billion. That’s more than a 50% discount from the price Musk paid last year.

Musk is said to have talked up Twitter/X’s potential as a payments and finance company as a route to reaching a $250 billion valuation.

Musk is reportedly worth $187.6 billion, making him the second-richest person in the world and still the richest person in the United States, despite losing $200 billion in wealth since acquiring Twitter. Most of his wealth stems from his stake in electric vehicle manufacturer Tesla.

The opportunities and risks of a financial services app

Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, sees the Twitter/X and eToro pairing as just the first step toward challenging the brokerage industry.

“Creating an American WeChat-style superapp that combines social, shopping, Web3 and financial services is a worthwhile goal and a bit of a holy grail,” says Schulman. “I see the partnership with eToro to access stocks, crypto and other assets as an early step, one of many, especially since Twitter is already popular with investors.

Schulman believes the Twitter connection could become a long-term threat to Robinhood and other app-based brokerage services.

“I expect Twitter to soon add payment functionality in competition with Apple Pay, PayPal/Venmo or Block/CashApp,” he says.

Brian Frank, investment manager at Frank Capital Partners, has doubts that Twitter/X can become a world processor in financial services.

“Twitter has 300 million users and currently very few ways to monetize users and pay content creators. Partnering with eToro is a step in the right direction, says Frank. “But it may not move the needle on increasing the $44 billion takeover value.”

Frank notes that while Twitter has a robust user community in finance, brokerages like eToro and Robinhood appeal much more to the retail market and appear to have saturated the market.

“According to Robinhood’s latest 10-K, users grew 1% in 2022 to 23 million funded accounts,” Frank said. “Any growth in eToro/Twitter may have to win these users over, which is more difficult than the ‘new vertical’ Hood captured.