Investors want a slice of X as Elon Musk's social media platform becomes the epicenter of news distribution, while corporate leftist media outlets and their government-funded censorship cartel face a fiery demise (see: Politico). This follows a multi-year advertiser boycott led by mega-corporations and relentless lawfare by an army of leftist nonprofits in their attempt to destroy the platform. However, those efforts have failed, and Musk has gone on the offensive, positioning X for a year of success.
In the latest report from The Wall Street Journal, top banks finished up a sale of debt backed by X. Sources familiar with the debt deal stated that the banks initially planned to sell around $3 billion in debt at 95 cents on the dollar. However, due to surging demand from large high-yield fund managers, the deal was upsized to $5.5 billion.
Buyers of the debt included Pimco and Citadel, who agreed to pay 97 cents on the dollar. The floating-rate debt carries an interest rate of 11%, with borrowing costs several percentage points higher than some of the riskiest loans on Wall Street.
The upsized sale of X debt marks the end of the multi-year doom loop for Musk's social media company. Since purchasing the platform in 2022, Musk has faced relentless advertiser boycotts and endless lawfare from shadowy leftist billionaire-funded nonprofit groups. However, X's ability to circumvent the Biden-Harris regime's censorship cartel and play a key role in the Trump-Vance presidential victory has placed Musk in Washington as a special government employee leading DOGE efforts. This, in return, has strengthened Wall Street's confidence in X.
Additionally, Trump's executive order on "restoring free speech and ending federal censorship" is expected to provide additional tailwinds for X and other alternative media platforms. This is yet another key driver of soaring optimism around X.
Last Friday, X CEO Linda Yaccarino and Morgan Stanley bankers presented prospective investors with metrics showing the social media platform's financial health was set to rebound in 2025.
"Revenue should improve rapidly this year, as the advertising boycott winds down," Musk told one X user.
WSJ noted:
Financial documents reviewed by investors showed that the artificial-intelligence company transferred hundreds of millions of dollars to the social-media company, the people said. That money has helped X pay its bills and stay current on its obligations, the people said. Growing advertising revenue at X should mean fewer transfers in the coming months and years, the people said.
The financial documents said X now holds a 10% stake in xAI, valued at around $5 billion, people familiar with the matter said. The AI company last year was valued at $50 billion. Musk had previously posted that X investors would own 25% of xAI.
X also reported to the investors 2024 adjusted earnings before interest, taxes, depreciation and amortization of about $1.25 billion and annual revenue of $2.7 billion. Investors said that was a better picture than they had expected and that X's finances hit an inflection point a few months before the November election.
In 2021, Twitter reported adjusted Ebitda of about $682 million and about $5 billion in revenue. That was the last full year before Musk took the company private.-WSJ
X's debt sale is a big relief for banks...
Yaccarino and X CFO Mahmoud Reza Banki told investors that advertisers are returning and that the company's valuable stake in xAI should give them enough confidence to invest in the social media platform.
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