Twitter Will Suffer If Elon Musk Won’t Make Debt Payment

Elon Musk is already facing a big struggle with trying to make Twitter profitable, but he could find the company in an even bigger hole if he tries to skip its next debt payment.

According to Bloomberg, Twitter is $12.5 million in debt, which Elon became responsible for when he acquired the company in November and made himself CEO. The billionaire is expected to make an interest payment near the deadline of January 27. However, there’s been speculation he may try to avoid the payment altogether.

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Months ago, Elon implied that Twitter could file for bankruptcy if it doesn’t become more profitable. He previously admitted the social media platform was losing $4 million in revenue per day.

His controversial takeover – part of a $44 billion buyout – hasn’t helped Twitter’s profitability. Many advertisers have cut ties with the platform amid Elon’s changes to open up Twitter to more “free speech,” as he’s claimed.

Elon introduced a paid version of Twitter shortly after the acquisition. For a monthly fee, users can gain access to a variety of benefits, including a blue verification checkmark.

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This change has made it easier than ever for fake accounts to run rampant, causing many Twitter users – famous and otherwise – to deactivate their accounts in response.

The businessman also fired nearly half of Twitter’s employees after the takeover, which has resulted in a myriad of lawsuits. Twitter is even being sued for falling behind on rent at its California headquarters.

Given Twitter’s financial situation, it wouldn’t be surprising to see Elon try to evade the looming debt payment. But as Bloomberg notes, doing so could be even more detrimental to Twitter.

The debt is owned by a group of seven banks, spearheaded by Morgan Stanley. They’re unlikely to make any exceptions, like an extension, to ease Twitter’s burden.

But if Twitter simply fails to make the payment, the banks may be able to force the company into Chapter 11 bankruptcy. With a 79% stake in the company, the consequences would be particularly severe for Elon.

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The SpaceX founder has already dipped into Tesla stocks multiple times to fund his Twitter acquisition. He’s reportedly sold $36 billion in stock over the years, frustrating Tesla investors. But half of the sales have happened since announcing the Twitter deal last year.

He’s also made several Tesla shares sales despite promising to not offload anymore in August.

Sources: Bloomberg, Insider,

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