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Banks Stuck with Twitter As Users Flee

Wednesday, October 25, 2023Wednesday, October 25, 2023By Macie Jones
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Banks Stuck with Twitter As Users Flee

I know you get sick of us covering Elon Musk but he makes a lot of news. He continues to make news even as his social network struggles to keep users while servicing billions in debt.

As Elon Musk picked Twitter fights with Wikipedia, an extraordinarily useful Internet property, banks were struggling to unload Twitter debt they’re holding.

Twitter Drags Down Banking Stocks

When banks issue large amounts of debt for corporate takeovers, they usually sell the debt to other investors looking to profit off the debtor’s interest payments. Unfortunately, Bank of America, Morgan Stanley, and other big banks have struggled to unload Twitter’s debt a year after Musk borrowed $44 billion to buy the company. The Big Banks, plus some smaller ones, loaned Musk $13 billion. Musk proceeded to fire a huge chunk of Twitter’s workforce, including its Content Moderation and Safety divisions, to save money so that can make the interest payments on time.

Since the banks can’t resell the debt, they’ve been carrying these liabilities and it’s impacted their financials and stock prices. Bank of America has underperformed banking industry stock indexes this week.

Smarter money, who didn’t loan Musk billions, estimate the banks will lose 15% of the value of their loans or $2 billion. For sure, this is all funny money, but in the end regular people get impacted.

How? You say.

Ordinary people purchase shares in these banks via retail apps like Robinhood, or more accurately, their 401k and pension plans. The managers of your 401k and retirement accounts look for investments that will boost your returns on the savings you contribute. When the funds they invest lose money, so do you.

Picking Fights Where None Were Needed

It wouldn’t be so bad if Elon Musk were exacerbating Twitter’s already existing problems. Twitter was already rated as a junk status stock before he took private. He showcased his business prowess by committing to a misinformation at-all-costs strategy. Those who know, know freedom isn’t free. It’s a Buck O’Five.

Elon Musk proceeded to personify himself in Twitter’s policies. Extreme and incorrect free speech has turned off users and advertisers further pulling down any income the company can use to pay its debt.

He’s hamstrung his CEO, and this week he decided to pick with Wikipedia for no damned reason.

He picked up his phone and launched this missive:

It’s a known thing Elon Musk has a thin skin. It’s also a known thing he has a thing about encyclopedias. Another known thing is he’s never been so keen on how his Wikipedia page portrays him.

Wikipedia is an open source, crowd supported, and crowd edited Internet encyclopedia. The organization has full time employees, but the bulk of its workforce consists of volunteers. Wikipedia is mostly funded by donors, large and small. Our very own Editor-in-Chief is a Wikipedia donor.

The mythology states Elon Musk would read encyclopedias from cover-to-cover as a kid. He did it for knowledge and for kicks, and he doesn’t like how Wikipedia covers things. He dug in further on this and claimed Wikipedia’s journalists are agents of misinformation and don’t know how to cover news. Thing is. Wikipedia’s editors aren’t journalists and never claimed to be.

Celebrities have fled Twitter because of Musk. He brought on a bunch of bros who wanted blue checks. And he dared organizations and non-profits to leave. Twitter is at the whims of a man child who was falsely glorified by the Internet and revealed to be a flailing entrepreneur.

As Musk was spasming on his phone, tweeting whatever came to mind, Wikipedia got a lick in.

Picking fights with one of the top 10 Internet resources isn’t going to bring you any notoriety. It’s just going to turn people off.

-MJ