Elon Musk told staff X is ‘barely breaking even’, reports say

At least one bank is preparing to sell billions of the company’s debt next week

Michelle Del Rey
Washington D.C.
Tuesday 28 January 2025 14:02 EST
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Banks are preparing to sell off debt used to help Elon Musk purchase X as the tech tycoon tells employees the company is “barely breaking even.”

According to reporting from The Wall Street Journal, bankers at Morgan Stanley are planning to offload roughly $3bn in debt during a sale next week and are already contacting investors.

Bank of America and Barclays are two other big lenders that helped Musk make the $44bn Twitter purchase in 2022, which needed $13bn in financing. In August 2024, the outlet said it had “turned into the worst merger-finance deal for banks since the 2008-09 financial crisis”.

Musk himself even engaged in a court battle to exit the deal. Following his purchase, advertisers decided against running ads on the social media platform. Yet, some brands have begun using the platform to run ads, slightly improving X’s financials. Equity investors had reportedly slashed their stakes in the company by 78 percent.

Banks are hoping investors will give them 90 to 95 cents for every dollar on senior debt while retaining more junior holdings, The Wall Street Journal reported, stating that the banks had recently sold $1bn of debt to several investors in private deals.

Elon Musk and President Donald Trump attend an event together on January 19
Elon Musk and President Donald Trump attend an event together on January 19 (AP)

It’s not common for banks to hold debts for such an extended period. Usually, the debt will be held initially and then sold to investors within months. In this case, banks kept holding the debt to avoid selling at a loss, waiting for improving conditions for the market and company.

Meanwhile, lenders including Mitsubishi UFJ Financial Group, BNP Paribas, Mizuho and Société Généale are collecting high-interest payments from the company. Similar loans can pay out several percentage points more in interest.

Musk has been tasked with leading President DonaldTrump’s newly created Department of Government Efficiency in which he hopes to eliminate at least $1 trillion in government spending. His political ascendance could be attractive to investors as banks attempt to assure them the company’s financials have stabalized given its recent decrease in value. According to the outlet, that task hasn’t proved too difficult as some investors have reached out to banks hoping to buy the debt, believing the company could be seeing increased profits soon.

Musk reportedly wrote about the company’s lack of financial stability in an email to employees earlier this month.

“Our user growth is stagnant, revenue is unimpressive and we’re barely breaking even,” Musk told X employees.

“Over the last few months, we’ve witnessed the power of X in shaping national conversations and outcomes... We are also seeing other platforms begin to adopt our commitment to free speech and unbiased truth,” Musk reportedly continued in what appeared to be a nod to Meta’s recent decision to adopt a Community Notes function similar to the one on X.

The Tesla CEO later wrote on X: “This report is false. I sent no such email. WSJ is lying.”

Musk has tried several different ways to boost X’s profits, including making users pay for verification, something that had previously been given to users of notoriety and journalists. On Tuesday, the company’s CEO Linda Yaccarino announced a new deal with Visa for peer-to-peer payments on X.

The company hopes the new function will rival Zelle or Venmo. Users will be able to move funds between traditional bank accounts and a digital wallet on the app.

When Musk purchased the app a few years ago, he hoped it would become a platform users could utilize for a myriad of purposes, with banking being one of those targeted systems. He sought to allow users to place their “entire financial world” on X.

CNBC reported the deal had been in the works for over a year as the company applied for the necessary licenses. The company is now licensed in 41 states and with the Financial Crimes Enforcement Network to allow the transfer of funds.

Yaccarino called the new service “another milestone for the Everything App”. The service is expected to launch in the company’s first quarter.

The Independent has emailed X for comment.

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