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The Wall Street banks sold nearly all the $12.5 billion worth of loans that financed Elon Musk’s completion of the X platform acquisition in 2022. 

According to the Financial Times, the seven major banks, led by Morgan Stanley, surpassed their $3 billion target in their sale efforts by securing $4.74 billion in transactions because investor demand exceeded $12 billion. The banks made worthless efforts to sell these loans for over one year until their value plummeted to a final price of $1 billion.

Investors show renewed interest in Twitter loans

Banks, including Morgan Stanley, Bank of America, Barclays, and MUFG, have been unable to sell their debt since October 2022 due to the financial risks associated with the platform. Previous attempts to sell portions of the loans in 2023 and early 2024 failed, even at discounted prices. However, investor sentiment shifted significantly following Donald Trump’s return to the White House and his public alignment with Musk. The change in political climate increased confidence in X’s long-term prospects, making the debt more attractive.

Earlier this year, Morgan Stanley sold $1 billion worth of debt to Diameter Capital Partner and then completed another $5.5 billion sale in February for 97 cents per dollar. The sale accelerated when Musk merged his AI startup xAI into X. This strategic move improved X’s valuation, attracting more investor confidence. The latest loan transaction resulted in complete payment for the banks, while some credit instruments now sell at higher rates on the secondary market.

Remaining debt and plans

The financial institutions maintain approximately $1 billion worth of unsecured loans, indicating the highest level of risk in the business arrangement. The higher rate of interest included in unsecured loans also introduces increased possibilities of default. The unsecured lenders of X Limited would receive repayment only after every other creditor, including X Limited. Investors wait for the banks to determine their approach to remaining debt by either selling off loans or refinancing with preferred equity. The market interest rate and high demand will allow banks to profit from current conditions.

Tesla stock drops amid Musk’s expanding focus

The merger of Musk’s right-wing political influence and corporate restructuring boosted X’s financial viability, although Tesla investors have concerns. Tesla’s share price dropped by 6% to $328.50 on Tuesday, marking the fifth consecutive day of decline that stripped market value exceeding $200 billion. Market analysts point to mounting industry competition as the main reason for X’s share price decline. 

They especially highlight the Chinese automotive giant BYD because it is teaming up with DeepSeek to build autonomous driving systems. BYD positions itself as a significant industry competitor by announcing plans to release self-driving functionality in its upcoming 21 vehicle models.

Morgan Stanley analysts have maintained a $430 price target for Tesla, but caution that increased competition could impact the company’s profit margins. Meanwhile, Musk’s growing commitments extend beyond Tesla and X. He continues to lead SpaceX, xAI and has expressed interest in acquiring OpenAI. Additionally, Trump has appointed him to lead the Department of Government Efficiency (DOGE), a new initiative to reduce government spending and eliminate regulatory hurdles.

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