Wall Street Banks Eye Debt Sale as Musk's X Platform Strives for Financial Rebound

Reports have emerged that prominent Wall Street banks are contemplating the sale of a significant portion of debt associated with Elon Musk's X platform in an effort to alleviate longstanding financial strain. Insiders indicate that Morgan Stanley has approached investors with plans to sell up to $3 billion of the debt next week. This loan was initially extended by banks including Morgan Stanley, Bank of America, and Barclays to aid Musk in his 2022 acquisition of what was then known as Twitter.

The banks are aiming to facilitate the sale of senior debt at a rate of 90 to 95 cents on the dollar while maintaining their stakes in the subordinate loans. There is a concerted effort to convince potential buyers that X's financial situation has begun to stabilize. Indeed, some investors have proactively reached out to the banks, showing a renewed interest in X’s debt, citing a perceived improvement in the firm’s economic health.

Despite this optimism, Musk has openly acknowledged in a January communication with employees that X continues to face critical financial hurdles, characterized by stagnant user growth and flat revenue, achieving only near break-even results. The banks have not publicly disclosed their internal valuations of the loans to X, yet some of the company's shareholders have significantly reduced their estimates of the value of their holdings by as much as 75%.

Following Musk's takeover, the platform saw a mass exodus of major advertisers, severely impacting revenue. Nevertheless, informed sources suggest a gradual financial recovery as certain brands resume their advertising campaigns on X. In recent communications, Musk has expressed a positive outlook on the platform's rebound, highlighting its growing impact on shaping public opinion and policy, alongside an indication of a similar trend among rival platforms such as Meta, which is adopting X's approach to community-driven content verification.