Elon Musk Sends an Email to X Employees: "We Are Just Reaching Financial Equilibrium."
User growth on the platform formerly known as Twitter is 'stalled'.
Since Elon Musk completed the purchase of Twitter, now known as X, he has stated that the company is in “a very critical situation from a revenue standpoint.” Recently, it has been reported that banks are organizing a strategy to offload part of the $13 billion in debt they lent to Musk to finance the transaction.
It is noted that Musk sent an email to employees this month, where he stated: “we have witnessed the power of X in shaping national conversations and outcomes,” although he also acknowledged that “our user growth is stagnant, revenues are unimpressive, and we are barely reaching break-even.”
The reason Bank of America, Barclays, and Morgan Stanley hold a large part of this debt is to avoid selling at a loss due to changes in economic conditions, in addition to Musk facing a lengthy legal battle to try to escape the deal. While equity investors have reduced the value of their stakes by as much as 78 percent, it is reported that “the banks expect to sell senior debt at between 90 and 95 cents on the dollar, while retaining more junior holdings.”
As Musk mentioned in his email, the banks are said to be looking to leverage their connection with Donald Trump since some anonymous investors may be interested in acquiring under the belief that the company’s finances will recover. However, Musk had previously suggested that the company could achieve positive cash flow “in a matter of months” nearly two years ago, and it is currently facing over a billion dollars in annual interest payments on the loans.
The platform appears to be increasingly turning into a testing ground for its ambitions in artificial intelligence, and despite X introducing some new features, such as job listings and a video tab, there are still few signs of the service Musk had promised, capable of managing “all of someone’s financial life” by the end of 2024.
