At the moment, X—formerly known as Twitter—seems like a terrible investment.
Readers may remember that in order to help finance his $44 billion acquisition, Elon Musk borrowed $13 billion from Morgan Stanley, Bank of America, and five other large banks. The Wall Street Journal claims that since then, the agreement has turned into the worst bank merger-finance transaction since the financial crisis of 2008–2009.
Why? Banks typically sell the debt they have lent money for takeovers to other parties in exchange for fees. Due to X’s poor financials, it hasn’t been possible, therefore the loans have burdened the banks and turned into “hung deals,” as the industry refers to them.
According to the Wall Street Journal, the banks decided to approve these loans “mostly because it was too good to refuse the temptation of banking the richest person on the planet.” It appears to be an expensive error now unless they can get X to pay interest and principal back when the loans mature.
