I think this analysis might work in a vacuum (but see sibling comments about the assumptions of how many ads are served to Blue users), but the biggest problem is the tremendous debt that the Musk takeover has saddled Twitter with. Perhaps you could run a social network sustainably at reasonable cost and profits.

Twitter has over 12 billion USD in debt though, and with rising interest rate the interest payments are going to be an absolute drag on financial performance. Those payments MUST be met, otherwise Musk will not own Twitter at all. Scaling down user numbers is unlikely to help. Even 3% interest rate on 10b is 300 million per year.