Elon Musk Reportedly Scrambled To Assure Banks They Wouldn't Lose Money On Twitter Acquisition Despite Expected $2 Billion Hit
Portfolio Pulse from Bibhu Pattnaik
Elon Musk has been reassuring bankers who financed his $44 billion acquisition of Twitter, now known as X, that they will not face financial losses despite a potential $2 billion hit. Banks like Bank of America, Barclays, and Morgan Stanley provided a $13 billion loan for the buyout. The banks may confront significant losses due to a decline in advertising revenue at X, partly caused by Musk's controversial comments, leading to advertisers withdrawing. There is concern that the banks might have to hold the depreciated debt on their books beyond 2024.

December 16, 2023 | 5:30 pm
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NEGATIVE IMPACT
Bank of America faces potential losses from the $13 billion loan provided for Musk's Twitter acquisition due to a decline in advertising revenue at X.
The potential $2 billion loss and the decline in advertising revenue at X, which could affect the ability to repay the loan, are likely to negatively impact BAC's short-term financial outlook.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Barclays is at risk of incurring losses from the financing of Musk's Twitter buyout, with concerns over X's reduced ad revenue and the ability to offload the debt.
Barclays' involvement in the $13 billion loan for the Twitter acquisition and the subsequent decline in X's ad revenue, which may affect debt repayment, could negatively impact its stock in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Morgan Stanley, as one of the financiers of Musk's Twitter acquisition, could face a financial hit due to X's declining ad revenue and the potential $2 billion loss on the debt.
Morgan Stanley's exposure to the $13 billion loan for Musk's Twitter deal and the risk of holding depreciated debt due to X's ad revenue downturn could lead to a negative short-term impact on its stock price.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80