- Musk’s controversial cost-cutting measures, including layoffs, reportedly led to a decline in advertising revenue.
- The debt sale is seen as a crucial market test, with banks hoping to move forward after delays caused by X’s uncertain financial trajectory.
Wall Street banks are preparing to sell $3 billion worth of loans tied to Elon Musk’s acquisition of X, formerly known as Twitter, in a crucial market test. The debt sale comes as banks, including Morgan Stanley, Bank of America, and Barclays, aim to recoup funds lent to Musk during his $44 billion buyout of the platform in 2022.
The move signals renewed investor interest in the platform’s finances, though risks remain tied to X’s turbulent trajectory under Musk’s leadership.
According to Reuters, Morgan Stanley has reportedly begun reaching out to potential buyers ahead of next week’s planned sale. The loans are reportedly priced at 90–95 cents on the dollar. This represents a notable improvement compared to earlier bids, which would have forced banks to accept losses of up to 20% on the debt’s face value.
After Musk implemented controversial cost-cutting measures, including significant layoffs and content moderation policy changes, advertisers pulled back, reducing the platform’s revenue and increasing the risk of default
See Related: Elon Musk’s X Faces Ban In Brazil Amidst Legal And Political Turmoil
X’s Mixed Signals For Investors
Despite X’s recent struggles, including declining ad revenue and ongoing public scrutiny of Musk’s leadership, some investors see a potential upside. Reuters previously reported that Musk’s political influence and changing U.S. political dynamics might enhance the platform’s long-term prospects, helping banks avoid steep losses in debt sales.
The $3 billion loan sale marks an important turning point for lenders involved in financing Musk’s X acquisition. In addition to Morgan Stanley, the consortium includes Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale. Banks typically sell such loans shortly after a deal closes, but the uncertainty surrounding X delayed this process.
Investors remain cautious, but analysts say the 90–95-cent pricing reflects realistic market conditions. Success will depend on how investors evaluate X’s evolving business model and potential revenue recovery. With the debt sale, banks aim to move forward, even as the platform remains under the microscope for its volatile shifts under Musk’s leadership.
