After purchasing Twitter (currently known as X), Elon Musk frequently expresses concern about the company’s financial health. Musk stated that during this period, the platform’s income sources were weak and the company came under a serious financial burden. According to the latest news from The Wall Street Journal, these concerns still continue. Musk made striking statements about the company’s financial statement in his last e-mail to employees.
According to The Wall Street Journal, the $13 billion debt Musk took out to finance the purchase is still held by major banks. Major financial institutions such as Bank of America, Barclays and Morgan Stanley are making plans to divest some of this debt. However, the change in economic conditions, Musk’s long court process and the cautious approach of investors complicate this process.
According to the news, banks currently plan to sell the senior portions of the debt they hold for between 90-95 cents per dollar. However, it is stated that they will continue to hold the majority of less senior debts. However, Musk’s statements about recovering the financial picture were not enough to attract the attention of investors. “Our user growth is stagnant, our revenues are far from satisfactory, and we are barely breaking even,” Musk said in his email to employees.
Could Elon Musk use his closeness with Donald Trump?
The news suggests that banks may try to persuade some investors to take on debt by using Musk’s connection with Donald Trump. Behind this approach lies an effort to create a positive expectation from investors regarding X’s financial condition and growth potential. However, it remains unclear whether this strategy will be successful.
In his statements about two years ago, Musk said that X could become cash flow positive within a few months. However, this promise has not yet been realized and the company is still struggling with annual interest payments exceeding $1 billion. In addition, although X has made some innovations recently (features such as job postings, video tab), its plans that the platform will offer a comprehensive financial service by the end of 2024 are not yet clear.
In particular, Musk’s effort to turn the platform into a testing ground with artificial intelligence goals has diversified the company’s current focus. However, instead of increasing income, this may lead to increased financial risks.
It remains unclear what kind of financial picture X will present in the coming months, how much of Musk’s promises he will be able to fulfill, and whether banks will be successful in selling debt.