According to sources related, banks have begun discussions with investors to sell debts stemming from Elon Musk’s acquisition of Twitter, aiming to alleviate the financial burden on the banks.
In 2022, Elon Musk acquired Twitter and subsequently rebranded it as X with a value of up to $44 billion. Utilizing funds from various sources, including a total bank loan of $13 billion, Elon Musk’s venture with X has not grown as expected. This has prompted financial institutions to seek cost reductions for other investors to potentially replace them, reducing the risk that Elon Musk may not be able to repay interest and principal.
Reports indicate that major banks opt to hold short-term debts to maturity but sell long-term debts at a slight loss, such as at 0.9-0.95 dollars per dollar. For example, Morgan Stanley plans to sell debts totaling $3 billion.
The future revenue risks of X have been reflected in various investment companies that jointly acquired Twitter, like Fidelity, who have gradually decreased stock value.
Email correspondences between Musk and X employees suggest that the platform’s recent direction aligns with industry trends, like Meta’s shift to utilizing Community Notes for content verification. However, X’s user base remains stagnant, revenue is unimpressive, and profitability seems distant.
Source: The Wall Street Journal
TLDR: Banks are looking to offload debts from Elon Musk’s Twitter acquisition, as the financial performance of the rebranded X platform falls short of expectations.
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