Elon Musk’s $44 billion acquisition of social media platform X (formerly Twitter) in October 2022 has created significant challenges for the banks that financed the deal. Here are the key points of concern:

– **Financing Structure**: Musk secured $13 billion from seven banks, including Morgan Stanley and Bank of America, to fund the purchase.
– **Debt Issues**: The financing is characterized as the worst merger finance deal since the 2008 financial crisis. “Hung” debt remains on banks’ balance sheets, leading to substantial write-downs.
– **Inability to Offload Debt**: Banks typically sell takeover loans to investors but have struggled with X’s debt due to the platform’s poor financial performance, which has prevented these loans from being resold profitably.
– **Business Performance**: X’s value has reportedly dropped over 50% to $19 billion, and revenue projections for the year are around $600 million, insufficient to cover its $1 billion annual interest obligations.
– **Impact on Banks**: The prolonged struggle with the Twitter loans has led to significant management and staffing upheavals, particularly at Barclays, where over 200 people resigned amid drastic salary cuts.
– **Connection to Tesla**: Concerns about X’s financial sustainability are impacting Tesla investors, with speculation that Musk may need to sell $1 billion to $2 billion in Tesla shares to alleviate X’s financial burdens.
– **Analyst Sentiment on TSLA**: Current analyst consensus on Tesla (TSLA) stock is Hold, with a mixed outlook reflecting concerns over recent performance and a projected downside potential in stock value.

In summary, Musk’s complex acquisition of X is raising significant red flags for banks and Tesla shareholders alike, creating a ripple effect of financial precariousness.