Twitter’s value dropped by more than half after Musk’s acquisition
Banks, including Morgan Stanley, unable to recover loans
The ranking of U.S. investment banks in Twitter’s loans has been reversed, ‘[Edaily Reporter Isuhyun Lee] Elon Musk, one of the world’s wealthiest individuals and CEO of Tesla, is facing criticism that the funds lent by banks to acquire the old Twitter have become one of the worst loans since the 2008 financial crisis.’,
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, ‘According to a report by The Wall Street Journal (WSJ) on the 20th local time, the loans provided by banks when Musk acquired Twitter in October 2022 amounted to $13 billion (about 17.3 trillion won), but even after two years of acquisition, the banks have been unable to recover the loans.’,
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, ‘According to market research firm PitchBook LCD, the loans provided for the Twitter acquisition have become one of the longest outstanding acquisition transaction loans since the 2008 financial crisis.’,
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, ‘Steven Kaplan, a finance professor at the University of Chicago, stated, “The Twitter acquisition is not only the largest transaction in dollar terms since the 2008 financial crisis, but also one of the largest transactions ever,” adding, “This loan has put much more burden on the banks than other transactions.”‘,
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, ‘Some banks have significantly reduced their profits by devaluing this loan by hundreds of millions of dollars. Some banks have had to shrink the size of funds available for other merger and acquisition deals due to the non-recovery of Twitter’s loans.’,
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, ‘Earlier this year, Musk’s holding company discussed restructuring plans for the Twitter loans with the banks, including partially repaying some of the loans and reducing bank interest rates, but X, the entity that acquired Twitter with Musk, did not follow through with the plan.’,
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, ‘The banks that provided loans to Musk’s holding company for the Twitter acquisition include Morgan Stanley, Bank of America, and Barclays, among others. As a result of the loans for the Twitter acquisition, the rankings of U.S. financial investment banks have changed as well. Bank of America and Morgan Stanley, which held the top two positions in 2021 and 2022 before Musk’s Twitter acquisition, gave way to JP Morgan and Goldman Sachs in 2023 and 2024. Barclays even cut some employee compensations.’,
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, ‘The value of X, which rebranded from Twitter after Musk’s acquisition, has dropped by more than half. Musk acquired Twitter for $44 billion, and as of last year, X’s value plummeted to around $19 billion.’,
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, ‘While the number of users on X has reportedly increased, the company has faced difficulties in revenue generation due to massive layoffs affecting two-thirds of the total workforce since Musk’s acquisition and advertiser departures due to owner risks.’,
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, ‘Amid assessments that the Twitter acquisition has essentially failed, U.S. investment banks hope that Musk, regarded as one of the world’s top billionaires and leading several companies including Tesla, Neuralink, and xAI, will continue trading. Particularly, they see revenue generating opportunities in potential IPOs of Musk’s space companies SpaceX and Starlink that they do not want to miss out on, according to reports by WSJ.’,
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