X’s situation has not improved since Musk’s acquisition. The new owner’s controversial decisions, such as waves of layoffs and reduced content moderation, have caused a massive flight of advertisers. Major brands like Coca-Cola and Apple have pulled their ads from the platform, a significant loss considering that ad revenue was X’s primary source of income before the acquisition.
Despite Musk’s efforts to diversify the platform’s revenue, particularly through paid subscriptions, the results have fallen far short of expectations. According to the New York Timesthe social network generated only $114 million in revenue in the United States in the second quarter of 2024, marking a 53% drop from the same period in 2023.
To make matters worse, the platform’s audiences have stagnated. Since Musk’s arrival, X has only seen a 1.6% increase in daily active users over the past year, well below the 15% annual growth seen between 2019 and 2022.
This worrying situation increases the pressure on banks, which see their capacity to finance other companies seriously limited. Regulators, scalded by the recent collapse of Silicon Valley Bank, are closely monitoring the debt levels of financial institutions. Morgan Stanley and Bank of America, once leaders in the leveraged investment market, have since been eclipsed by JP Morgan and Goldman Sachs, which did not participate in financing the acquisition of X.
Faced with this situation, one solution could be for Elon Musk to repay part of X’s debt in exchange for a reduction in interest. However, the billionaire has not yet expressed interest in this option. The banks are therefore waiting, hoping that the situation will improve, but aware that time is against them. The saga of the acquisition of X illustrates the colossal risks that large financial institutions can be exposed to when they engage in operations of this magnitude.
