Starlink

Elon Musk’s takeover of Twitter, which he rebranded as X, turned into a financial nightmare that nobody saw coming—well, maybe some did, but the banks involved sure didn’t want to believe it.&nbsp;
The $13 billion Elon borrowed to fund this wild adventure has made this one of the worst deals in merger finance since the 2008 financial meltdown.&nbsp;
These banks—Morgan Stanley, Bank of America, Barclays, and others—jumped on the chance to work with the world’s richest man, probably thinking it would be smooth sailing. But instead of cashing in quickly by offloading the debt to investors, they’ve been left holding the bag.
The debt is “hung,” as they say in the industry, meaning it’s stuck on their balance sheets, gathering dust and dragging down their profits. You’d think they’d be able to find someone willing to take on the debt, but X’s poor financial performance has made that impossible.
<h3 id="b-the-loan-disaster-that-won-t-go-away-b">The loan disaster that won’t go away</h3>
The loans Elon used to buy Twitter quickly <a href="https://www.wsj.com/tech/elon-musks-twitter-takeover-is-now-the-worst-buyout-for-banks-since-the-financial-crisis-3f4272cb?mod=hp_lead_pos5" rel="noopener noreferrer nofollow" target="_blank">lost</a> value right after the $44 billion deal closed. The banks were supposed to get rid of this debt fast and make a quick buck on the fees.
It’s worth mentioning that even Elon himself admitted the deal was overvalued. But the banks were too star-struck by the chance to work with him to back out. Elon and his investors threw in about $30 billion to buy Twitter, giving the banks some cushion if things went south.&nbsp;
Spoiler: things went south fast.
Nearly two years into Elon’s reign, X is still in the financial shitter. The company itself said last year that its value had dropped by more than half, landing around $19 billion.&nbsp;
Sure, there’s been some uptick in app usage, probably because people can’t look away from the trainwreck, but that hasn’t translated into money. Advertising revenue, which was already struggling before Elon got involved, isn’t bouncing back.
And the guy hasn’t exactly helped things. He went from telling advertisers who fled the platform to “go fuck yourself” to straight-up suing them and a trade group, accusing them of illegally conspiring to boycott X. The group, unsurprisingly, is planning to fight these claims in court.&nbsp;
Meanwhile, X’s financial health is on life support. Even before interest rates stopped rising, Elon said X was on the hook for about $1.5 billion in annual interest payments.
The banks did try to clean up the mess earlier this year. They discussed a plan where Elon would pay down some of X’s debt, and the banks would lower the interest payments.&nbsp;
But surprise, surprise, that plan went nowhere. Now the banks are stuck in a Catch-22. They don’t want to piss off Elon because they’re hoping to get a piece of the action if SpaceX or Starlink goes public.

All the things that went wrong with Elon Musk’s Twitter takeover

Table of Contents

Cryptopolitan_News

Other articles published on Aug 22, 2024

Man Who Foretold Trump’s Assassination Attempt Makes Bold Prediction About XRP

Bitcoin Drops Below $60K as Market Faces Broad Decline

Tether Launches USDT on Aptos, Offering ‘Fraction-of-a-Penny’ Transaction Fees

Blockchain company SOS Limited is in trouble with the NYSE

Trump Secures 73% Support in Elon Musk’s X Platform Poll

Toncoin Price Shows Short-Term Upward Trend

Join our free newsletter for daily crypto updates!