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Tech billionaire Elon Musk has been a public figure for decades, but has enjoyed an outsized profile in recent years, not a little of which is down to his decision to acquire Twitter for $44 billion in 2022. In the end, that deal was almost forced on Musk after the courts got involved, but you wouldn’t know it from the way the trollish memester launched into his new role with various galaxy-brained schemes that mostly seem to have made Twitter worse: Including, of course, renaming it X.
A new report by the Wall Street Journal claims that some of the banks that helped Musk finance the deal are now getting a little antsy about their investment (some $13 billion of the total) and are looking into how they claw it back. Institutions including Bank of America, Barclays, and Morgan Stanley have been holding onto the debt, hoping for more favourable economic headwinds, and are now hoping to per the WSJ “sell senior debt at 90-95 cents on the dollar, while retaining more-junior holdings.”
The waters will apparently be tested next week with a $3 billion package of debt, which follows a sale of $1 billion in debt to private investors. The problem for the banks is that it’s widely believed Musk overpaid for the company, and its subsequent underperformance has only confirmed this in the eyes of many. The only real counter to this is Musk’s new political position as some sort of right-hand man to President Donald Trump which, some investors believe, could augur well for the future X.
That may prove wildly optimistic (other investors are reportedly braced to take haircuts of around 75%), because few of Musk’s grandiose pronouncements about Twitter/X have come to pass. The interest payments alone on Musk’s deal amount to $1 billion a year, while new additions such as job listings and a dedicated video tab seem unlikely to make any dramatic change to the bottom line. At one stage Musk said X would become “the everything app”, which users could basically live their lives through: That seems like a pipe dream.
The WSJ report includes an email sent to staff by Musk, also seen by the Verge, which is some distance from the positivity of his public pronouncements on the business. “We’ve witnessed the power of X in shaping national conversations and outcomes,” claims Musk, but “our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
The report adds that the banks hope to use the narrative of Musk’s link to Donald Trump to recoup their losses, as some unnamed investors may be interested in buying based on a belief that its financials are on the way up. Not really sure how that stacks up, but that’s high finance for you.
Hours after the WSJ published its story, Musk denied sending the email. “This report is false,” said Musk. “I sent no such email. WSJ is lying.”
Well, we’ll soon see how many investors are rushing out to buy this debt. Despite an exodus of advertisers and various controversies around Musk himself, the company’s finances are apparently improving, but X is simply not playing the same game as rivals like Facebook when it comes to ad revenue.
The email from Musk to staff, which Musk claims isn’t real, does sound an awful lot like him though: “We are also seeing other platforms begin to adopt our commitment to free speech and unbiased truth,” he ends, presumably a reference to Meta’s decision to abandon fact-checking.
Musk has owned X for less than two years, but in that time the site has transformed from a major news source and online forum to, as PCG’s Robin Valentine put it, “something so inherently hateful and toxic as to be avoided altogether.”
It was striking to see so many individual subreddits recently vote en masse to just blacklist X links and, personally speaking, I barely use the site these days because it’s just no longer a pleasure to be on. But the Musk reign shows no sign of ending: Maybe, when it does, he’ll once more have time to level up his own characters in PoE2 and Diablo.
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Kurt Indovina
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