According to Cointelegraph, there have been thousands of corporate buyouts since the 2008 banking crisis, but none have been as problematic as Elon Musk’s acquisition of Twitter, now rebranded as X. A report from the Wall Street Journal reveals that approximately $13 billion in loans used for the purchase are currently stuck on banks’ balance sheets.

Typically, banks sell such debt to other investors, allowing those not involved in the initial financing to become stakeholders. However, since X is a private company, this process has been complicated. When Musk purchased Twitter, it was valued at around $38 billion, making his $44 billion offer seem excessive. At its peak in 2020, the company had a valuation of about $62 billion. Currently, X is not required to report its revenues, making it difficult to ascertain its exact value. The company claimed in Q4 of 2023 that it was worth about $19 billion, while Fidelity analysts estimated it at $12.5 billion in January 2024.

The banks holding the majority of these loans, including Morgan Stanley and Bank of America, have seen their values decline as X struggles with revenue. Although these banks still receive interest payments, the loans are burdensome on their balance sheets. Barclays, one of the banks involved, even reduced employee salaries, with the mergers and acquisitions team facing a 40% pay cut, citing several hung deals, with X being the largest.