From Investing.com: 2024-11-15 17:25:44

Elon Musk’s ties with President-elect Donald Trump have Wall Street banks hoping to offload $13 billion in debt linked to Musk’s purchase of X, formerly known as Twitter. Musk’s changes to X have affected its revenue and debt value, but increased traffic around events like the U.S. elections provides hope for a turnaround.

Banks, including Morgan Stanley and Bank of America, have been holding onto the debt from Musk’s $44 billion purchase of X in 2022. Musk’s leadership changes at X have impacted its financial performance, leading banks to explore options to sell the debt without taking significant losses.

The value of the debt linked to Musk’s purchase of X has been affected by changes to the platform, including a decrease in advertising revenue due to user and advertiser concerns. Banks are closely monitoring X’s financial performance and user engagement to determine the best course of action regarding the debt.

Musk’s connection to President-elect Donald Trump has potential benefits for his various business ventures, including Tesla and SpaceX. Tesla’s market value reached over $1 trillion following the election results, highlighting the positive impact of Musk’s political ties on his businesses.

The future of X’s business remains uncertain, with potential division among its user base due to Musk’s close ties with the new administration. Newer platforms like Bluesky and Meta’s Threads have been gaining users from X, further complicating the platform’s revival efforts.

Despite increased web traffic on X during the U.S. elections, the platform saw a decline in user deactivations following the event. X is expected to report its latest finances to the lending consortium soon, allowing banks to make decisions on the debt based on the platform’s performance.

Banks in the lending consortium, including Barclays, Mitsubishi UFJ, and Mizuho, have marked down the value of the debt on their books, reflecting varying outlooks on X’s future performance. Attempts to sell the debt in 2022 resulted in potential losses of up to 20%, prompting banks to hold onto the debt instead of taking significant losses.



Read more at Investing.com: Musk’s political ascendancy stirs hopes of redemption for X banks By Reuters