Banks hope Musk’s political rise will ease X debt burden

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Elon Musk‘s growing influence in US politics has sparked hope among Wall Street banks that they may soon unload $13 billion in debt tied to his 2022 acquisition of X, formerly Twitter. Lenders, including Morgan Stanley and Bank of America, believe Musk’s alignment with President-elect Donald Trump could enhance X’s financial prospects, potentially enabling them to sell the debt without incurring significant losses.

Musk’s management of X, marked by sweeping layoffs and content moderation changes, initially scared off advertisers and reduced revenue, lowering the debt’s value. However, recent spikes in platform traffic during major events, such as the US election, have raised optimism. Trump’s active presence on X, reinstated by Musk after a previous ban, and a robust US economy could further support revenue growth, according to banking insiders.

Despite these hopes, challenges persist. User departures to rival platforms like Bluesky and Threads continue, and X’s traffic surged only briefly during the election. Banks monitor Musk’s financial update next quarter before deciding whether to hold or sell the debt. Meanwhile, X remains current on its interest payments, and some banks have prepared for potential losses, awaiting better market conditions to offload the debt.