Since Elon Musk finalized his acquisition of Twitter, now rebranded as X, he has continuously stated that the company is facing a “very dire situation from a revenue standpoint.” According to a recent Wall Street Journal report, banks are strategizing a coordinated effort to offload part of the $13 billion in debt incurred by Musk to finance the acquisition. The report includes an email sent to employees, confirmed by The Verge, where Musk acknowledged, “…we’ve witnessed the power of X in shaping national conversations and outcomes,” yet also noted, “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
The significant debt held by Bank of America, Barclays, and Morgan Stanley arises from attempts to avoid incurring losses as market conditions shifted, alongside Musk’s protracted legal battle to exit the deal. While equity investors have reportedly diminished their share values by as much as 78%, the Journal indicates that “banks hope to sell senior debt at 90-95 cents on the dollar, while retaining more-junior holdings.”
As referenced by Musk in his email, the report suggests that banks aim to leverage Musk’s association with Donald Trump, as some unnamed investors may consider acquiring based on the belief that the company’s financials are poised for recovery.
Notably, Musk had previously stated that the company could achieve cash-flow positivity “within months” nearly two years ago, yet it still grapples with over $1 billion in annual interest obligations on the loans. The platform increasingly serves as a testing ground for Musk’s AI initiatives, as highlighted in a report earlier this month, and while X has introduced features such as job listings and a new video tab, there remains little indication of the comprehensive service Musk envisioned that would manage “someone’s entire financial life” by the end of 2024.
