As they read on, fans of schadenfreude will find that the banks that lent Trump $13 billion to buy Twitter (with Trump himself putting up some of the remaining $30 billion, along with contributions from Oracle founder Larry Ellison and the firm of recent Trump supporter Marc Andreessen) are now having serious lender regrets.
They’d love to resell that debt to someone else, but that’s going to be very hard to do with Twitter’s plummeting revenue and Musk telling advertisers to “fuck you” and filing lawsuits.
The issue is so severe for banks including Morgan Stanley and Bank of America that it’s affecting employee bonuses. I can almost hear the popcorn munching as I write this.
However, here’s where the difference between Elon Musk, the richest man in the world, and just about everyone else becomes clear.
First, let’s say you or I make a bad investment and the return on that investment falls by 50%. We may find it very difficult to pay off the interest on the debt we incurred because of that bad investment.
And that could lead to banks seizing our assets, but Musk, who is again the richest man in the world, continues to make payments that amount to about $1.5 billion a year.
More importantly, according to The Wall Street Journal, which first reported the news, the banks that loaned Elon Musk $13 billion and then allowed him to burn that money now want to keep doing business with him.
…They’re eager to be well-positioned to work with Mr. Musk and his half-dozen companies, ranging from electric-car maker Tesla to Neuralink to xAI. Many see the potential initial public offerings of Mr. Musk’s rocket company, SpaceX, and satellite business, Starlink, as revenue-generating events they won’t want to miss.
So the reason they loaned Musk $13 billion in the first place wasn’t because they thought he had great plans for Twitter (though some certainly did), but because they wanted to get into Elon Musk’s business.
And even now, after seeing for themselves how mercurial and self-destructive Musk can be, they still want to stay in the business.
And there’s cold logic to this: SpaceX, for example, is theoretically worth $175 billion. Whether that’s its “real” valuation is up for debate, but if Musk were to actually go public, it would be a huge IPO and banks would be competing to get a piece of it.
So laugh at Elon Musk all you want, but know that his bankers will continue to say they are serious about backing him.