The banks that financed Elon Musk’s $44 billion purchase of Twitter are still struggling a year later to contain the damage to their balance sheets.
Seven banks including Morgan Stanley, Bank of America and Barclays lent Musk around $13 billion to buy Twitter a year ago this coming Friday. Under normal circumstances, they would have unloaded the debt to Wall Street investment firms soon thereafter. But investor appetite for Twitter, which Musk has since renamed X, has cooled since the billionaire took over, forcing the banks to hold the debt on their own balance sheets at a discounted value.
The banks currently expect to take a hit of at least 15%, or roughly $2 billion, when they sell the debt, people familiar with the matter said. That would mean hundreds of millions in losses for those holding the largest pieces, which include Morgan Stanley, Bank of America, Barclays and MUFG.
BNP Paribas, Société Générale and Mizuho were also involved.
Morgan Stanley put up some $3.5 billion. 15% of that would be a bit over $500 million. Over the 12 months since the loan MS has had a profit of over $50 billion, so the Twitter ding to their earnings is about 1%. No biggie. Or they could just hold the debt and not sell at a loss.
https://www.macrotrends.net/stocks/charts/MS/morgan-stanley/gross-profit
DB2
Surprising, since the investment would be lucky to be worth 50% of what boy genius paid for it. Revenue is off 60% by his own admission, user stats are declining, and (so far at least) there is no forward progress on any of his other ambitious dreams. Hard to imagine a 15% devaluation is anything close to what should be required.
Sell the debt to boy genius at a 90% mark-up from original loan value. He is NOT that good at investing after all…
Fidelity thinks X has been increasing in value.
http://www.axios.com/2023/08/30/elon-musks-x-value-fidelity
Fidelity marked up the value of its shares in X/Twitter for the third consecutive month — while still holding them at a deep discount, according to new disclosures.
By the numbers: Fidelity increased the valuation by 8% during the month ending July 31, following an 11% bump for June.
[unfortunately…]
- The investment giant is holding the shares at a 58% discount, per the disclosure Wednesday.