Will Musk vs. Trump Impact XAI's $5B Debt Deal?

The Impact of Musk-Trump Discord on xAI Funding

The public disagreement between Elon Musk and President Donald Trump, while potentially boosting traffic to Musk’s social media platform X (previously known as Twitter), may present challenges for xAI, the platform’s parent company.

Earlier this year, X and xAI were consolidated under a single entity. Reports from Bloomberg indicate that Musk is seeking $5 billion in debt financing, alongside a potential $300 million from a secondary sale, to support the newly combined organization.

Timing of Investor Pitches

This fundraising effort has coincided with a noticeable strain in the relationship between Musk and Trump. Notably, The Wall Street Journal detailed an instance where Morgan Stanley was actively presenting xAI to prospective investors.

This pitch occurred while Musk and Trump were simultaneously engaged in a public exchange of critical posts on their respective social media accounts.

Investor Response and Potential Adjustments

Initial expectations were for the debt to be sold at face value – 100 cents on the dollar. However, a trader informed the WSJ that the debt was, at times, trading at 95 cents on the dollar on Thursday.

Investors have also suggested that Morgan Stanley might need to enhance the offering to attract sufficient capital. Increased interest rates are being considered as a possible incentive.

Potential Implications

• The timing of the public dispute could be negatively impacting investor confidence.
• Declining prices may necessitate more favorable terms for investors.
• xAI’s ability to secure funding could be affected by external factors.

The situation highlights the interconnectedness of business and public relations, particularly when dealing with high-profile figures and significant financial undertakings.