The Journal. Lending Elon Musk Money Was A Very Bad Bet
Aug 27, 2024
WSJ reporter Alexander Saeedy dives into the financial chaos following Elon Musk's $44 billion Twitter purchase. He reveals how Musk borrowed $13 billion from banks and why that decision is now deemed one of the worst since the financial crisis. The conversation explores the banks' miscalculations, the financial turmoil with advertisers fleeing, and the staggering drop in Twitter's value from $44 billion to $19 billion. Saeedy also discusses the aftermath for banks like Barclays, facing significant losses and layoffs.
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The Loan Origination
- Elon Musk borrowed $13 billion from banks, including Morgan Stanley and Barclays, to buy Twitter.
- The banks planned to quickly sell the loan to investors like Fidelity and Vanguard.
The Banks' Motivation
- Banks saw financing Musk's acquisition as a way to gain favor and future business with his other companies.
- They aimed to profit from fees and quickly offload the debt, not holding it long-term.
Twitter's Financial Downturn
- Twitter's finances declined after the acquisition, with advertisers leaving due to Musk's actions.
- This created a financial strain, as Twitter had to pay substantial interest on the loan.