According to reports, Wall Street banks are getting ready to sell up to $3 billion of debt holdings in X. Morgan Stanley financiers have contacted investors in anticipation of a sale that is scheduled to take place in the week starting Monday.
According to the Wall Street Journal, banks are looking forward to receiving 90 to 95 cents per dollar. However, Musk denied the Journal report and claimed that the newspaper was lying.
Wall Street Journal cited an email Musk sent to staff members, acknowledging that the company was increasing in power and influence while admitting that finances remained problematic. However, Elon Musk said that he had sent no such email in an X post.
This report is false. I sent no such email.
WSJ is lying.
— Elon Musk (@elonmusk) January 25, 2025
Normally, banks sell such loans to investors soon after a deal is done. Still, in the case of X, lenders have faced difficulties in offloading the debt.
How did X get here?
In 2022, Musk secured financing from Morgan Stanley and other institutions, including Bank of America, Barclays, Mitsubishi UFJ BNP Paribas, Mizuho, and Societe Generale. This was to finalize his $44 billion acquisition of Twitter.
Musk made big changes to the platform. He fired nearly 80% of Twitter’s personnel. This amounted to more than 6,000 employees after he took control of the social media platform. The job cuts were part of multiple rounds that lowered the company’s staff from about 7,500 to around 1,500.
His edgy posts also scared off advertisers, which reduced income. This lowered the debt’s value because the chance of not being able to pay it back went up.
Moreover, in late 2022, efforts to sell the debt received offers that would have caused banks to lose up to 20% of their value
However, reports say that in November, Musk’s growing influence and closeness to President Donald Trump made banks more optimistic about the social media platform’s future. This helped them sell the debt without taking a big loss.
X succeeds in 2024
Although it has lost millions of users to other apps and lost millions of dollars in ad income, X insists that everything is fine. It also said that video views increased in 2024.
In addition, X reported that it is gaining traction with Gen Z users. According to the social media platform, this reflects the progress made in building long-term success for X, delivering content, community, and innovations that cater to this new wave of consumers.
X also asserted that it has implemented many innovations that have transformed the industry this year. However, individuals claim that the updates, with the exception of Community Notes, are not really different from those that other applications have released.
it has also complemented its original content push. In a statement, the social media platform said, “With exclusive content as one of our key drivers, we raised the bar this year through our Originals on X series […] Projects like The Offseason, the All In Boston Celtics docuseries and collaborations with cultural icons like Jim Rome captured audiences and drove deeper engagement across the platform, proving that storytelling on X was a big hit in 2024.”
X has also shared a listing of the most engaged “gold-verified brands.” Gold verified are the brands that pay top dollar to use the app. It listed Netflix, Redbull, SpaceX and others.
On the other hand, the Bluesky app is on the rise. Since the US election, more than 1 million new users have joined the emergent social media site. The company reported that the app has grown to almost 15 million users worldwide, up from 9 million in September. The user count has increased mainly in North America and the UK.
Social media commenter Axel Bruns mentioned that the platform provides an option to the Elon Musk-owned social media app. This is because it has a better way to block or suspend troublesome accounts and manage harmful behavior.
Trump has been good for markets since he took office
President Donald Trump, who was sworn in on Monday, quickly started his duties. In just five days, he has signed a number of executive orders about AI, crypto, diversity, equity, and inclusion.
Good news. All three of the major US averages clocked weekly gains. The S&P 500 reached its highest point ever earlier this week. However, it fell back a bit. The standard is still over 6,000.
Trump’s inauguration also influenced the crypto market. Bitcoin fluctuated between losses and gains this week but remains above the $100,000 level. In addition, Solana’s TRUMP, MELANIA, and BARRON (not a coin tied to Trump’s son) saw notable increases in value over the inauguration weekend. DOGE saw a price increase of about 8%. Ethereum recorded gains, rising nearly 6%.
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Source: https://www.cryptopolitan.com/wall-street-banks-to-sell-x-debt-at-discount/