When Elon Musk bought X for $44 billion in 2022, more than a quarter of that was financed by loans from banks including Morgan Stanley. Banks normally quickly sell off such loans, but in this case they kept much of that debt because investors were reluctant to bet on the social media company’s floundering business.
Mr. Musk’s newfound power in President Trump’s administration has helped change investors’ minds.
On Thursday, the banks sold roughly $4.7 billion of X’s debt, according to two people familiar with the transaction, more than the $3 billion that they had originally intended to sell.
Mr. Musk, who has become a close adviser to the president and is running a government efficiency initiative, has faced increasing questions about whether the companies he leads — including the electric automaker Tesla and the rocket company SpaceX — are benefiting from his position as Mr. Trump’s right-hand man.
X has become a go-to platform for information on the administration’s plans, which Mr. Musk broadcasts to his account’s more than 217 million followers. Advertisers have returned in droves to X, people familiar with the deals said, fueling a boost in revenue. The company told investors that its revenue in December jumped 21 percent from a month earlier, a person with knowledge of the finances said.
An X spokesman and Morgan Stanley declined to comment. Bloomberg previously reported the jump in revenue and details of the transaction.
Selling the debt — which totaled $12.5 billion at the time of the acquisition — helps Mr. Musk and the banks, which have been saddled with it for two years. Just two months ago, investors were negotiating to buy that debt at a loss of 10 percent to 20 percent for the banks, one person involved in the discussions said.
But investor appetite has shifted drastically. Last week, the banks sold $5.5 billion of the debt to a small group of investors, the people familiar with the transaction said. This month, Diameter Capital Partners bought $1 billion of the debt. The banks have now sold nearly all of their X debt, leaving roughly $1 billion on their balance sheets.
Investors were motivated to buy X’s debt because of several factors, including the company’s improving revenue. Advertisers like Amazon and Apple have returned after fleeing over controversial actions by Mr. Musk, three of the people involved in the discussions said.
X’s revenue rose 40 percent last year after a dismal 2023, the person familiar with the company’s finances said. More subscribers are paying for X’s premium service, and Mr. Musk’s artificial intelligence venture, xAI, pays X to license its data, the people familiar with X’s business said.
“More business seems to be coming in than it has in the last two years,” Brett Weitz, X’s head of content, wrote in an internal email in January, which was seen by The New York Times.
Going into the Super Bowl last Sunday, the company was set to earn $7.9 million in related advertising revenue, slightly outperforming its $7.2 million from the event in 2024, according to an internal document seen by The Times.
The company’s extensive cost-cutting measures, including reducing staff by more than 80 percent, have also appealed to investors, the people said.
X’s fortunes — both financially and politically — have improved as Mr. Musk has aligned himself with Mr. Trump, three people familiar with the transaction said.
And while the people familiar with the deal said investors did not expect to curry favor with Mr. Musk by lending him money, they saw the future of his companies as brighter now that he was at the heart of the government. They also said they believed Mr. Musk’s new role meant the money was more likely to be paid back.
Some advertisers that returned to X recently were worried about the repercussions from advocacy groups if they supported the company, said three ad industry executives who were not authorized to speak publicly about the matter. Others were concerned about potential retribution from Mr. Musk if they did not return.
Last year, Mr. Musk sued several big brands and the Global Alliance for Responsible Media, a nonprofit coalition of major advertisers led by the World Federation of Advertisers, claiming the group had orchestrated a boycott against X. GARM shut down days after the suit was filed, but Mr. Musk has continued to press his case against advertisers. This month, his lawyers added several companies to the case, including Lego, Nestlé and Shell.
Mr. Musk’s ties to the White House could help his other businesses. Weeks after Mr. Trump was elected, executives at Palantir sent a memo to engineers, asking that they exclusively use Grok, an A.I. chatbot designed by Mr. Musk’s xAI, two Palantir employees said. It was the first time the company had asked them to use Grok over other chatbots.
A spokeswoman for Palantir declined to comment.
Ryan Mac and Sheera Frenkel contributed reporting.
