Wall Street banks holding $13 billion in debt linked to Elon Musk’s acquisition of the social media platform X (formerly Twitter) are optimistic about offloading it, thanks to Musk's increasing political influence. As a key ally of President-elect Donald Trump and head of a new government efficiency department, Musk’s connections might boost X's prospects, potentially improving its financial performance and reducing risks associated with the debt.
The debt, which financed Musk's $44 billion purchase in 2022, has been a burden for lenders like Morgan Stanley and Bank of America. The platform's declining value, stemming from controversial policy changes and revenue losses due to advertisers pulling back, has made it difficult for banks to sell the loans without heavy discounts.
Recent spikes in X’s web traffic during the U.S. elections and Trump's return to the platform have fueled cautious optimism among banks, but analysts remain divided on whether Musk’s political ties will attract enough advertisers and users to sustain long-term growth.
While some banks have set aside reserves to cover potential losses, others are closely watching upcoming financial reports to decide their next steps. Previous attempts to sell the debt in late 2022 attracted bids reflecting losses of up to 20%, prompting banks to hold off on sales. X has continued making interest payments on the debt, but newer social media platforms like Bluesky and Threads remain competitive, drawing users away from X.
