Elon Musk told staff X is ‘barely breaking even’, reports say
Elon Musk told staff X is ‘barely breaking even’, reports say
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At least one bank is preparing to sell billions of the company’s debt next week. Banks are preparing to sell off debt used to help Elon Musk purchase X as the tech tycoon tells employees the company is “barely breaking even.”. According to reporting from The Wall Street Journal, bankers at Morgan Stanley are planning to offload roughly $3bn in debt during a sale next week and are already contacting investors.
Bank of America and Barclays are two other big lenders that helped Musk make the $44bn Twitter purchase in 2022, which needed $13bn in financing. In August 2024, the outlet said it had “turned into the worst merger-finance deal for banks since the 2008-09 financial crisis”.
Musk himself even engaged in a court battle to exit the deal. Following his purchase, advertisers decided against running ads on the social media platform. Yet, some brands have begun using the platform to run ads, slightly improving X’s financials. Equity investors had reportedly slashed their stakes in the company by 78 percent.
Banks are hoping investors will give them 90 to 95 cents for every dollar on senior debt while retaining more junior holdings, The Wall Street Journal reported, stating that the banks had recently sold $1bn of debt to several investors in private deals.
It’s not common for banks to hold debts for such an extended period. Usually, the debt will be held initially and then sold to investors within months. In this case, banks kept holding the debt to avoid selling at a loss, waiting for improving conditions for the market and company.
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