In October 2022, Elon Musk secured about $13 billion of the $44 billion needed to acquire Twitter, later renamed X, through the debt market. Over a year later, Musk’s creditors have only partially assigned this debt. Musk admitted to X employees that the platform “barely avoids losses” while struggling to grow its user base and revenue.
As reported by The Verge, citing The Wall Street Journal, Musk acknowledged the stagnant user growth and unimpressive revenue during a recent address to employees. Originally, creditors intended to resell the debt shortly after Musk’s purchase of Twitter at the end of 2022. However, they anticipated recovering no more than 78 cents on the dollar at the time.
Debt Market Prospects and Political Impacts
The political landscape shifted following Donald Trump’s victory in the U.S. presidential election last November. Musk’s perceived alignment with Trump improved investor confidence, boosting hopes for better returns on his debt. Sources now claim that banks aim to recover 90-95% of each dollar but plan to sell only $3 billion of the debt. Morgan Stanley is set to participate in the deal, which could take place as early as next week.
Despite these efforts, the financial strain on X remains significant. Musk had initially hoped to bring the platform to breakeven within months of the acquisition. However, the company faces over $1 billion in annual interest payments alone.
X’s Ongoing Struggles and Future Goals
Musk’s ambitious goal to transform X into a “super platform” with advanced financial tools by the end of 2024 remains unfulfilled, adds NIX Solutions. Instead, he has primarily used X for experiments in artificial intelligence. Meanwhile, X continues to struggle with attracting advertisers, a critical revenue stream, and Musk faces legal scrutiny from regulators over the acquisition process.
Though Musk’s vision for X is ambitious, financial and operational challenges persist. We’ll keep you updated as more developments unfold regarding Musk’s efforts to steer X toward profitability and innovation.