> Morgan Stanley and others, such as Bank of America and Barclays, lent Musk money to complete his $44 billion buyout of X, then known as Twitter, in 2022.
Hm. So who owes the debt? What's the collateral?
Supposedly Musk bought Twitter personally, but this looks like a leveraged buyout in trouble.
The banks involved had a "sell-down letter", an agreement between the lenders that any sell-off gave the other lenders a right to participate at the same price. That expired ten days ago.[1] The interest charge is about $1.5bn/year now.
A big question is how long those loans run at the old interest rate. Rates are higher now.
Total revenue from X is said to be about $1bn/year, not that anybody outside really knows.
So, 500m a year to whisper sweet nothings into the minds of a significant % of the world population. Or brainwashing them, whatever you like. I think it's not a bad price, someone surely feels theyre getting their moneys worth.
Bonds selling below par is common, so this article with very few details doesn't say much.
IIRC Twitter LBO bonds were getting an average of 9.6% YTM when raised, and had maturities from 2027 to 2030. Selling at 90-95 means an increase in the yield of about 2% (napkin math says 1%-5%).
I wonder who's going to be buying, since they're selling at just a 5% discount. Since the purchase, Twitter has lost 85% to 90% of its revenues. So, I think the discount doesn't factor in just how much value X has lost. And, unless Musk buys back the debt, I don't see any takers lining up.
Judging by how much stock Elon had to sell, plus the loans/equity raised for the initial purchase, it feels like an all-round bad decision.
From another perspective, judging by how X played a huge role in the 2024 election & Elon's new role as First Friend, maybe his rapidly improving fortune factors into the calculus.
I'm sure it factors into the calculus of the sellers -- best chance they have that there might exist an irrational buyer onto whom they can unload the losses is likely now ...
These loans have nothing to do with twitters value though. The question is will musk pay the debt off, not whether twitter will become more valuable. Right after the deal was done investors wondered musk might just let the loans default and give twitter to his creditors, but now that it seems so important to him politically he is less likely to do that.
I don't know, for the past few years Elon has seemed more passionete about trolling on Twitter than literally anything else in the world. One of the first changes after the purchase was to make it so that his tweets got special rules so they show up to everyone whether they like it or not. He currently posts on it a gazillion times per day.
Maybe in the future his attention will drift elsewhere, in which case yeah he'll let the company die without a second thought, but we don't seem to be anywhere near that point these days.
Looking at the revenue growth, does anyone know why it increased in value to the degree it did leading up to its sale? I recall there was some discussion around the amount of bots (not the existence, the degree).
I don't understand to what extent bots impacted Twitter's revenue or if at all that happened, after all, that only came up as one of a few tactics Elon tried using to get out of buying Twitter.
Thing is, as a public company, Twitter's revenues were public, amounting to $5.229B/yr (i.e., up to the sale). And, the New York Times reported they were doing $114M/quarter in early 2024. Annualized, that's $456M per year. So, an 87% revenue decline if we compare X's self-reported revenues against Twitter's last public disclosures before being acquired.
Probably not. But it did raise Musk's prominence in the political realm, and might have been a crucial step towards the significant role that he played himself.
That wasn't the plan, to be sure. But whatever the plan was originally, it is now secondary.
if you surround yourself with intelligent people (which for the most part he did in both 2016-2020 and now) they will get sick of him soon (we have 78 years of examples of this…) :)
He bought himself into the White House as a tech-bro Rasputin, probably the most paid for that level of influence, so we can expect him to get his money's worth.
Does the value of a company matter for their bonds?
As I understand it, Twitter is breaking even given all expenses, which means that they should not have problems paying back their debt. In which case, the investment seems solid. If we were talking stocks, I would understand it.
If they aren’t growing, and barely breaking even, the chances of going into the red are not low. Idk if the bonds have a rating but I don’t think X would have a AAA rating right now?
If it’s really worth 95%, it’s only held up by the political situation and investors’ general Elon bubble.
Bonds do have a rating, but Microsoft is the only AAA corporate bond I know of off the top of my head. Even Amazon is AA, while I would guess Twitter more like AMC at CCC- if it were rated.
Debt is short a put. The shareholders can walk away from a default and you are stuck with whatever the company is worth. So the more enterprise value vs the debt, the safer.
Yeah, thanks for this. The WSJ piece was reporting -84%, but if you measure against Twitter's last full year/publicly reported revenues before going private, it's closer to -90%.
They seem to be only selling senior debt, which is _somewhat_ less risky (when a company is wound up, senior debt gets paid first) and hanging onto the junior debt.
Eh, he bought the White House for $40bn. I say that's a very good purchase, given how he can now leverage it to get better deals for his business. E.g. Greenland for resources to make batteries.
I had read* that his interest in Ukraine and putin was to gain a share of Ukrainian mineral wealth. If that rumour was true, then yeah I could see him advocating for an invasion of Greenland. Although, didn't the Greenland SNAFU start with trump?
* And don't have a link to whatever it was, so take with a cyber truck full of salt!
If my fuzzy memories are anywhere close to correct, Trump wanted to buy it in 2017, Denmark said no, and he went on to slapping stupid[0] tariffs on Canadian and European exports before putting tariffs on China.
Trump's 2025 playbook seems entirely identical. The thing is, America has wanted Greenland for at least a century[1]. I would not be surprised if there's some long-timer in the Executive Branch that just happens to have a chip on their shoulder about how much America should have a Greenland. There's a lot of reasons why America would be safer and wealthier with the island, but Denmark isn't going to sell it. Hell, Greenland itself doesn't even want to be Danish, much less American[2].
[0] They're stupid because any hope of America remaining economically prosperous without China to sell us cheap shit (or Saudi Arabia to sell us cheap oil) relies on having a large free-trade area. Y'know, the sort of thing TPP was supposed to give us.
> From another perspective, judging by how X played a huge role in the 2024 election & Elon's new role as First Friend, maybe his rapidly improving fortune factors into the calculus.
That's it, it's even said in the article.
Everyone know that Elon musk in the us government and him being buddy buddy with Trump is like inviting a wolf into a lamb's den.
He has failed in his fiduciary duty to other investors. If your goal is to build a propaganda bullhorn as opposed to maximizing returns for your investors then don't take money from other investors or at least warn them.
The most powerful country on the planet has been taken over by oligarchs and your concern is for the investors? As someone who regularly invests in high risk stocks, you'd have to be a complete fucking idiot not to see this coming.
The investors backed Elon Musk, a man with a long history of picking fights with the SEC, breaking labor laws, and being a manchild - why would they expect something different?
You haven't been paying attention. This guy famously called a diver a pedophile because he insulted his half-baked submarine idea. That was 7 years ago.
Also, if you were really an investor ready to commit large amounts of money, you could do a basic amount of research and talk to people that have worked with Elon. I've known people that have worked for him going back over a decade and they have all had horrible things to say about him.
Right, he did call a diver a pedophile. But overall he seemed sane back then. As far as people who worked with Musk saying horrible things about him, isn't that true for just about every CEO?
There is a difference between "wow my CEO really sucks" and "wow my CEO had another kid with an employee, regularly talks about the importance of breaking labor laws, shows up to work visibly high on a regular basis, and enjoys making racist comments about Apartheid."
Why do you think this sticker [1] is so popular? It is because prior to Twitter acquisition, despite some blemishes, most people thought Elon Musk is a smart but otherwise normal person. Most of the things you mentioned came later.
Most people were _not paying attention_, until the Twitter thing made it impossible to ignore. But there was all sorts of unhinged behaviour for years before.
I never said he was unpopular. I said you weren't paying attention - and every single thing I mentioned happened before the acquisition. You are being willfully ignorant.
The comment is only the most visible bit. He hired a private investigator to find rumours about him as well. And tripled down with various arguments like a supposed child bride.
Musk has so many wacky things, public spats with his trans kid. Attacking the kid publicly. Imagine how hard that would be, your name is out there. Your extremely famous dad is talking about you? You are just a very vulnerable avg person.
Slight simplification: Bonds aren't like stocks. For a given company, there is typically 1 common stock issue(perhaps multiple share classes FAANG-style for voting or maybe issued on different exchanges), maybe a preferred issue and then like 10+ different types of bonds, which are very different(typically, the shittier the company's financial position the bigger the difference between the senior/secured and the junior/subordinated debt).
Senior debt is basically either directly secured by specific assets/collateral or is the first to get paid out in case of a default. Junior debt is typically unsecured(no specific collateral) and goes after other, senior unsecured debt has been paid off.
When you hear about a company's credit rating, its usually the rating of the senior unsecured(so the "safest" bonds that aren't secured by specific assets).
It's part of breaking a loan into bonds, which is called securitization.
Suppose we divide the repayments into 5 bonds. If 20% of the money comes in, it goes to the first bond. Then the next 20% to the next, and so on. The later bonds are called subordinate - they only pay if the other ones already were paid off. Because they are riskier, the later ones aren't worth as much.
The actual rules are more complex than this toy example. But that's the basic idea. And this is how a risky loan is sold to different investors at different prices with different tolerances for risk/return.
They’re saying that the debt is structured with layers (tranches), where the top layers have added protections and get paid back first if there’s trouble, while the “subordinated” layers sit below them in priority.
“Extra levels of credit protection” means the tranches being sold to investors have features (e.g., senior ranking, collateral, covenants) that reduce default risk. Banks typically retain the subordinated (riskier) portion, which absorbs losses first, allowing the sold tranche to appear safer.
The problem in The Big Short was that lenders bundled many loans with correlated risk and advertised the resulting bundle as less risky. Because of the demand for these bundles they issued and bundled increasingly risky loans as time went on. Eventually when the market corrected all of these loans defaulted at the same time.
Get sued. You described a pure scam scheme. Of course there were underwrites and the usual dilution of responsibility, but even in this case "I wasn't able to predict that I can't handle it" will not work.
There is a need - Twitter is now an excellent platform for propaganda and manufacturing consent. If Twitter defaults on the loans, my assumption is the creditors take control, and Musk gets a ton of value from being in control of Twitter.
In developed countries it's not quite that straightforward, but "his" plane will be owned by Totally Not Musk LLC, not Musk himself, so any putative drugs on it are not his problem.
In developing countries, anything goes. I've paid $15 for "VIP" clearance in Indonesia, which means I sit in a lounge sipping tea and my passport comes back to me stamped without me ever seeing an immigration official.
Ketamine is diverted from official sources, usually where it is produced(India, Denmark are common). It's not worth it to make in a lab given how plentiful it is. Its everywhere, in every city. He probably has a guy that gets it online. You can easily buy ounces on darknet markets. I don't recommend you do this-- I just find it interesting how this stuff is all going on as a second blackmarket economy in absolutely huge quantities.
If he’s using it he probably just has a prescription or a doctor that provides it to him. Ketamine isn’t all that hard to get prescribed and it is, frankly, a pretty mellow drug.
Specifically ketamine is only a Schedule III controlled substance. Any physician can prescribe it to any patient and it's available through the normal pharmaceutical system. It's not one of those really dangerous, addictive Schedule I drugs like marijuana.
To not lose all of it. Musk is shareholders and while shareholders make the decisions(or at least decide who do) they are also last to get any value when things go to receivership.
Am I thinking right but say the coupon is 9,6. And now they are selling it at 10% loss. But they got this coupon for 2 years over say ~4 of more safe loans. They are not even now losing too much and certainly not at 5?
Twitter/X is entirely a emperor has no clothes situation.
During Musk's acquisition, Twitter officially stated that around 5% of the platform was bots; Musk tried to back out of the deal because he believed the methodology used to get to that number to be bad. On one occasion he stated an estimate of 20%, but said it could be "much higher". Anyone who spends any significant time on X, post acquisition especially, is likely to agree with the "much higher" part of that.
(Remember this: Any time he's on Joe Rogan or talking to anyone who thanks him for his "service to America" by purchasing Twitter: Elon Musk did not want to buy Twitter. He realized it was a bad purchase very quickly, and tried to weasel out of it multiple times. He is a low-intellect coward who makes bad decisions, but he does surround himself with people who can clean up the repercussions of his bad decisions.)
Estimates of how many total active users (humans + bots) are on X vary wildly; Musk has said "600M monthly active" as of May 2024; but as of Oct 2024 SOAX estimated something more like 335M, with 105M in the United States [1]. Depending on what numbers you believe and what percentage you believe to be bots, this means there's anywhere between 10M-80M American Humans logging in to X on a monthly basis. The disparity between this number and the other major social networks is harrowing [2], as is the direction their user count [3] and advertiser count [4] is heading.
The xAI ambitions are also, put simply, bad decision making; which should come as no surprise given Elon Musk is not good at making decisions. AI is commoditized, and the majority of value in that space right now is being created in enterprise B2B, not B2C. xAI has no B2B plan; the combination of ChatGPT, Gemini, and Apple Intelligence rule the B2C zeitgeist, and there's literally nothing differentiating xAI to justify its high price tag. xAI has no integration with the hardware people are buying (until they start shipping it to Teslas; that's when you'll know its over for Musk); nor do they really have control over the software.
The only shred of value X has left is Elon Musk's personal connection to the President; yet he made it 3 days into the new Presidency before publicly ripping apart a major policy objective of the Trump administration; one that is well-aligned with his own business interests, because of a personal feud with Altman [5]. It seems very likely to me that Musk will self-sabotage that relationship within the first year. If the new purchasers of this debt believe they can use it to control him and leverage that relationship, they should be reminded that Tesla tried for years to get control of his Twitter shit-posting, and no one could. He cannot be controlled, and he has a demonstrated and catalogued history of engaging in public self-sabotaging behavior despite good and friendly counsel.
X's bot problem isn't only an issue for its advertisers and revenue; human, American ears listening to the things Musk posts is why the platform has value for Trump.
I'm skeptical about Elon Musk being the richest person on the planet. My mantra these days? 'Show me the money!' If Wall Street banks are preparing to sell $3B in X loans, maybe he should buy them back—with real cash this time.
Who cares if he's the richest? Why should he show this to you? How do you know that he should buy these loans as opposed to this being a normal process working out the same as it always does?
Maybe you should collapse the number of items you have an interest in formulating an opinion on so that you can give more attention to those things that you can provide something that adds to the discussion.
Hm. So who owes the debt? What's the collateral? Supposedly Musk bought Twitter personally, but this looks like a leveraged buyout in trouble.
The banks involved had a "sell-down letter", an agreement between the lenders that any sell-off gave the other lenders a right to participate at the same price. That expired ten days ago.[1] The interest charge is about $1.5bn/year now. A big question is how long those loans run at the old interest rate. Rates are higher now. Total revenue from X is said to be about $1bn/year, not that anybody outside really knows.
[1] https://finance.yahoo.com/news/exclusive-banks-funded-elon-m...
IIRC Twitter LBO bonds were getting an average of 9.6% YTM when raised, and had maturities from 2027 to 2030. Selling at 90-95 means an increase in the yield of about 2% (napkin math says 1%-5%).
Original debt of twitter buyout lost x%, with this latest sales it down overall to y%?
Judging by how much stock Elon had to sell, plus the loans/equity raised for the initial purchase, it feels like an all-round bad decision.
From another perspective, judging by how X played a huge role in the 2024 election & Elon's new role as First Friend, maybe his rapidly improving fortune factors into the calculus.
Of course it does! Why do you think Elon was complaining about the article so much?
Although that's based on a very distant view of his actions, maybe in private he's 100% on board.
Maybe in the future his attention will drift elsewhere, in which case yeah he'll let the company die without a second thought, but we don't seem to be anywhere near that point these days.
Do you mean from when Musk purchased it?
https://www.businessofapps.com/data/twitter-statistics/
Looking at the revenue growth, does anyone know why it increased in value to the degree it did leading up to its sale? I recall there was some discussion around the amount of bots (not the existence, the degree).
Pre-sale:
https://www.pewresearch.org/internet/2018/04/09/bots-in-the-...
https://www.pewresearch.org/short-reads/2018/04/19/qa-how-pe...
During the process:
https://www.cpomagazine.com/cyber-security/we-checked-elon-m...
I wonder to what degree bots are still influence the platform. For that matter, it would be nice to know how bad the problem is on Reddit.
Thing is, as a public company, Twitter's revenues were public, amounting to $5.229B/yr (i.e., up to the sale). And, the New York Times reported they were doing $114M/quarter in early 2024. Annualized, that's $456M per year. So, an 87% revenue decline if we compare X's self-reported revenues against Twitter's last public disclosures before being acquired.
That wasn't the plan, to be sure. But whatever the plan was originally, it is now secondary.
Apparently it sort of was worth it for Musk, but it cost him, and is going to cost further down the line.
And you could argue his government access is due to controlling twitter
As I understand it, Twitter is breaking even given all expenses, which means that they should not have problems paying back their debt. In which case, the investment seems solid. If we were talking stocks, I would understand it.
If it’s really worth 95%, it’s only held up by the political situation and investors’ general Elon bubble.
What I've heard is the opposite, that the cost of servicing interest on the loans they now have exceeds 100% of their total revenue.
(Not profit, revenue: even if they cut absolutely every other cost to zero they'd still be losing money).
Source? Is this true?
https://archive.ph/cCOlA
https://www.wsj.com/finance/banking/wall-street-banks-prepar...
Eh, he bought the White House for $40bn. I say that's a very good purchase, given how he can now leverage it to get better deals for his business. E.g. Greenland for resources to make batteries.
* And don't have a link to whatever it was, so take with a cyber truck full of salt!
Trump's 2025 playbook seems entirely identical. The thing is, America has wanted Greenland for at least a century[1]. I would not be surprised if there's some long-timer in the Executive Branch that just happens to have a chip on their shoulder about how much America should have a Greenland. There's a lot of reasons why America would be safer and wealthier with the island, but Denmark isn't going to sell it. Hell, Greenland itself doesn't even want to be Danish, much less American[2].
[0] They're stupid because any hope of America remaining economically prosperous without China to sell us cheap shit (or Saudi Arabia to sell us cheap oil) relies on having a large free-trade area. Y'know, the sort of thing TPP was supposed to give us.
[1] https://en.wikipedia.org/wiki/Proposals_for_the_United_State...
[2] https://en.wikipedia.org/wiki/Greenlandic_independence
That's it, it's even said in the article. Everyone know that Elon musk in the us government and him being buddy buddy with Trump is like inviting a wolf into a lamb's den.
44 billion was a pretty small price to pay for the ultimate propaganda bullhorn.
The investors backed Elon Musk, a man with a long history of picking fights with the SEC, breaking labor laws, and being a manchild - why would they expect something different?
Also, if you were really an investor ready to commit large amounts of money, you could do a basic amount of research and talk to people that have worked with Elon. I've known people that have worked for him going back over a decade and they have all had horrible things to say about him.
[1] https://www.amazon.com/s?k=bought+this+before+elon+went+craz...
… Eh? I mean, that feels like setting an incredibly low bar for sanity, tbh.
https://www.wsj.com/tech/elon-musks-twitter-takeover-is-now-...
Senior debt is basically either directly secured by specific assets/collateral or is the first to get paid out in case of a default. Junior debt is typically unsecured(no specific collateral) and goes after other, senior unsecured debt has been paid off.
When you hear about a company's credit rating, its usually the rating of the senior unsecured(so the "safest" bonds that aren't secured by specific assets).
Suppose we divide the repayments into 5 bonds. If 20% of the money comes in, it goes to the first bond. Then the next 20% to the next, and so on. The later bonds are called subordinate - they only pay if the other ones already were paid off. Because they are riskier, the later ones aren't worth as much.
The actual rules are more complex than this toy example. But that's the basic idea. And this is how a risky loan is sold to different investors at different prices with different tolerances for risk/return.
“Extra levels of credit protection” means the tranches being sold to investors have features (e.g., senior ranking, collateral, covenants) that reduce default risk. Banks typically retain the subordinated (riskier) portion, which absorbs losses first, allowing the sold tranche to appear safer.
(o1)
I'm assuming wherever he flies, he avoids customs and immigration, and his plane/person never gets searched.
In developing countries, anything goes. I've paid $15 for "VIP" clearance in Indonesia, which means I sit in a lounge sipping tea and my passport comes back to me stamped without me ever seeing an immigration official.
https://www.dea.gov/drug-information/drug-scheduling
Like all drugs, it depends on how much you take.
Elon Musk email to X staff: 'we're barely breaking even'
https://news.ycombinator.com/item?id=42818026
During Musk's acquisition, Twitter officially stated that around 5% of the platform was bots; Musk tried to back out of the deal because he believed the methodology used to get to that number to be bad. On one occasion he stated an estimate of 20%, but said it could be "much higher". Anyone who spends any significant time on X, post acquisition especially, is likely to agree with the "much higher" part of that.
(Remember this: Any time he's on Joe Rogan or talking to anyone who thanks him for his "service to America" by purchasing Twitter: Elon Musk did not want to buy Twitter. He realized it was a bad purchase very quickly, and tried to weasel out of it multiple times. He is a low-intellect coward who makes bad decisions, but he does surround himself with people who can clean up the repercussions of his bad decisions.)
Estimates of how many total active users (humans + bots) are on X vary wildly; Musk has said "600M monthly active" as of May 2024; but as of Oct 2024 SOAX estimated something more like 335M, with 105M in the United States [1]. Depending on what numbers you believe and what percentage you believe to be bots, this means there's anywhere between 10M-80M American Humans logging in to X on a monthly basis. The disparity between this number and the other major social networks is harrowing [2], as is the direction their user count [3] and advertiser count [4] is heading.
The xAI ambitions are also, put simply, bad decision making; which should come as no surprise given Elon Musk is not good at making decisions. AI is commoditized, and the majority of value in that space right now is being created in enterprise B2B, not B2C. xAI has no B2B plan; the combination of ChatGPT, Gemini, and Apple Intelligence rule the B2C zeitgeist, and there's literally nothing differentiating xAI to justify its high price tag. xAI has no integration with the hardware people are buying (until they start shipping it to Teslas; that's when you'll know its over for Musk); nor do they really have control over the software.
The only shred of value X has left is Elon Musk's personal connection to the President; yet he made it 3 days into the new Presidency before publicly ripping apart a major policy objective of the Trump administration; one that is well-aligned with his own business interests, because of a personal feud with Altman [5]. It seems very likely to me that Musk will self-sabotage that relationship within the first year. If the new purchasers of this debt believe they can use it to control him and leverage that relationship, they should be reminded that Tesla tried for years to get control of his Twitter shit-posting, and no one could. He cannot be controlled, and he has a demonstrated and catalogued history of engaging in public self-sabotaging behavior despite good and friendly counsel.
X's bot problem isn't only an issue for its advertisers and revenue; human, American ears listening to the things Musk posts is why the platform has value for Trump.
[1] https://soax.com/research/twitter-active-users?utm_source=ch...
[2] https://datareportal.com/social-media-users
[3] https://mashable.com/article/elon-musk-x-declining-user-base...
[4] https://www.cnn.com/2024/09/05/business/advertisers-x-withdr...
[5] https://fortune.com/2025/01/24/donald-trump-sam-altman-opena...
Maybe you should collapse the number of items you have an interest in formulating an opinion on so that you can give more attention to those things that you can provide something that adds to the discussion.