$DOGE In a dramatic shift, Wall Street’s biggest banks have successfully offloaded almost the entire $12.5 billion debt that financed Elon Musk’s 2022 acquisition of Twitter, now rebranded as X. Led by Morgan Stanley, a consortium of seven major financial institutions—including Bank of America, Barclays, and MUFG—managed to sell $4.74 billion worth of loans on Thursday, surpassing their initial target of $3 billion due to overwhelming investor demand, which soared past $12 billion in orders, according to a report from the Financial Times.
For over two years, these banks struggled to find buyers for the debt, initially viewed as a high-risk burden. However, a combination of Musk’s growing influence in Washington and the strategic integration of his AI startup, xAI, into X has significantly boosted investor confidence. Today, banks hold just over $1 billion in remaining loans, a small fraction of what they were once stuck with.
📈 From “Toxic” to Treasure: What Changed?
The market’s sudden appetite for X’s debt is largely attributed to Donald Trump’s return to the White House and his public endorsement of Musk, recently naming him "First Buddy" in an official press conference, as reported by Cryptopolitan. Once considered a financial liability, X’s debt is now seen as a premium asset, with some loans already trading at 101-102 cents on the dollar in secondary markets.
Morgan Stanley initiated the first major sale in January 2025, moving $1 billion to Diameter Capital Partners. By February, another $5.5 billion changed hands at 97 cents on the dollar, signaling a shift in sentiment. But the real game-changer was Musk’s strategic merger of xAI into X, which significantly boosted the platform’s valuation and provided an additional layer of financial security.
With Thursday’s sale, banks managed to secure full value for the remaining debt—no discounts necessary. The final hurdle remains a $1 billion tranche of unsecured loans, the riskiest portion of the package, which carries higher interest rates but places lenders at the back of the line for repayment in the event of financial trouble. Analysts suggest two potential outcomes: a direct sale or a refinancing deal with new preferred equity. Either way, investor demand is soaring, and banks are in a strong position to capitalize.
📉 Tesla Stock Takes a Hit as Musk’s Focus Divides
While Musk’s involvement in Washington and his expanding empire have fueled optimism for X, Tesla investors are less enthusiastic. The EV giant’s stock plunged 6% on Tuesday, dipping to $328.50 amid a five-day losing streak that wiped out more than $200 billion in market capitalization.
According to JPMorgan analysts, a key factor behind the decline is China’s BYD, which recently announced a partnership with DeepSeek to develop next-generation autonomous vehicle technology. Their ambitious plan to introduce self-driving features across 21 new models poses a direct challenge to Tesla’s Full Self-Driving (FSD) system, which still requires driver supervision.
Competition in the robotaxi sector is intensifying, with Waymo, BYD, and Tesla all battling for dominance. While Morgan Stanley maintains a bullish $430 price target on Tesla, analysts caution that margin pressure from increasing competition could pose long-term challenges.
Adding to concerns, Musk’s growing political role is stretching his focus thin. In addition to leading Tesla, SpaceX, X, and xAI, Musk is now actively involved in Washington, where Trump has appointed him to oversee the Department of Government Efficiency (DOGE)—a newly formed initiative aimed at reducing federal spending, cutting regulations, and even eliminating government agencies.
As Musk juggles multiple high-stakes ventures, investors are watching closely—will he manage to balance innovation with leadership, or will distractions create turbulence for his business empire?
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