The $13 Billion Banking Problem Behind Musk's X Acquisition

Back in October 2022, Elon Musk completed his $44 billion acquisition of X (formerly Twitter), taking the social media platform private. But here’s where the story gets messy: seven major banks—including Morgan Stanley and Bank of America—funded a $13 billion loan to make this deal happen. Fast forward to today, and what bank does elon musk use for this massive debt has become Wall Street’s biggest headache since the 2008 financial crisis.

Why Banks Are Stuck With This Deal

Normally, banks don’t hold onto debt from large acquisitions. They quickly offload these loans to investors like hedge funds and pension plans. But X’s struggling finances changed everything. The banks couldn’t sell this debt without taking catastrophic losses, so the $13 billion loan remains stuck on their balance sheets—what insiders call “hung” debt.

According to PitchBook LCD data, these loans have been lingering longer than any comparable unsold deal since the 2008-09 crisis. The real kicker? The banks knew it was risky. Musk himself admitted X was overvalued when he bought it. But they financed the deal anyway, likely seduced by the prestige of banking the world’s richest person.

Barclays felt the pain hardest. The X debt on its balance sheet—the largest of their hung debts—forced senior management in their M&A division to take 40% pay cuts. Over 200 employees resigned in response.

X’s Debt Crisis: Can It Actually Survive?

The real problem isn’t just the banks’ losses. It’s whether X can actually service this debt. When Musk struck the deal, X faced over $1 billion in annual interest expenses—before operating costs. That’s brutal when the platform is only projected to generate around $600 million in annual revenue this year.

Even worse, X’s valuation has cratered. The platform disclosed a 50%+ decline, with its value now pegged at roughly $19 billion. Musk attempted to restructure the debt, but negotiations stalled, leaving lenders exposed.

The Tesla Connection: Could Musk Sell Shares?

X’s financial troubles aren’t just a problem for banks—they’re spooking Tesla investors. According to financial analysts, Musk might need to sell $1-2 billion in Tesla shares to address X’s mounting financial pressure. That possibility alone is rattling TSLA holders.

Currently, analyst sentiment on Tesla remains cautious. The stock carries a Hold consensus with 10 Buys, 14 Holds, and 7 Sells. Year-to-date, TSLA has dropped over 10%, and the average price target of $211.46 suggests potential downside of around 4.4% from current trading levels.

The bottom line: Musk’s $44 billion bet on X has become a $13 billion anchor dragging down multiple financial institutions and potentially threatening his flagship company’s stock price.