Elon Musk’s acquisition of X for $44 billion in 2022 was partially financed by loans from banks including Morgan Stanley. Initially, banks struggled to sell off this debt due to investor reluctance to bet on X’s struggling business. However, with Musk’s increased influence in Trump’s administration, investor sentiment began to shift.
Last week, banks successfully sold approximately $4.7 billion of X’s debt, exceeding their original $3 billion target. This move was propelled by X’s increasing revenue, which saw a 21% rise in December. Additionally, X has become a prominent platform for information on the administration’s plans, attracting advertisers like Amazon and Apple back to the platform.
Investor appetite for X’s debt has grown significantly. Just two months ago, they were negotiating to buy the debt at a loss, whereas now, Diameter Capital Partners has purchased $1 billion of the debt. X’s revenue increased by 40% last year, with more subscribers opting for the premium service.
X’s cost-cutting measures, including reducing staff by over 80%, have also appealed to investors. Musk’s association with Trump has further bolstered X’s fortunes, leading to improved financial and political outcomes.
While some advertisers have concerns about supporting X, fearing repercussions from advocacy groups or potential retribution from Musk, others have returned to the platform. Musk’s ties to the White House have also benefited his other businesses, such as xAI’s chatbot Grok being exclusively used by Palantir employees upon Trump’s election.
Overall, X’s recent success can be attributed to Musk’s influence, improving financials, and increased investor confidence, showing signs of a brighter future for the company.
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