Elon Musk's political rise is raising hopes for Wall Street banks to offload approximately $13 billion of debt linked to his acquisition of X, formerly known as Twitter. Banks including Morgan Stanley and Bank of America are optimistic that Musk's connections to President-elect Donald Trump could enhance X's prospects, potentially leading to a recovery in its financial standing. Musk acquired X for $44 billion in October 2022, but since then, the platform has faced significant challenges. The value of X has plummeted by 71.5% since Musk's takeover, as reported by Fidelity, which marked down its investment in the company to about $12.5 billion due to declining user engagement and advertiser exodus over concerns about hate speech and content moderation policies [2f3cc4f3].
Despite these challenges, X's web traffic peaked at 46.5 million visits the day after the U.S. elections, indicating a potential for increased engagement. However, this spike was accompanied by a notable loss of users, with 115,000 accounts deactivated on November 6, 2022 [2f3cc4f3]. The banks have marked down the value of the debt tied to Musk's acquisition and are currently considering their options as X prepares to report its finances next month. The financial landscape for X remains precarious, with advertising revenues having dropped significantly from over $4.5 billion to $2.5 billion, largely due to the platform's handling of controversial content [2f3cc4f3].
In an effort to recover lost revenue, X is now targeting small and medium-sized businesses and has lifted its ban on political advertising, aiming to generate $100 million from this sector in 2024. However, it remains uncertain whether political advertising can sufficiently compensate for the ongoing financial shortfall [2f3cc4f3]. As Musk navigates his political connections, the future of X and its financial recovery hangs in the balance, with stakeholders closely monitoring developments in both the political and social media landscapes.