Elon Musk's X, the rebranded Twitter, is facing significant financial challenges, with the company barely breaking even, according to an email sent to employees. The Wall Street Journal reports that banks are preparing to sell off some of the $13 billion in debt they took on to finance Musk's acquisition of Twitter in 2022.

The email, confirmed by The Verge, reveals that Musk acknowledged the company's stagnant user growth, unimpressive revenue, and struggles to break even. This contradicts Musk's previous claims that X would become cash-flow positive "within months" nearly two years ago. The company still faces over $1 billion in annual interest payments on the loans.

The banks, including Bank of America, Barclays, and Morgan Stanley, are holding onto the debt due to economic conditions changing and Musk's extended court battle to get out of the deal. As a result, equity investors have reportedly slashed the value of their stakes by as much as 78 percent. The banks hope to sell senior debt at 90-95 cents on the dollar, while retaining more-junior holdings.

One strategy the banks are considering is using Musk's link to Donald Trump to attract investors who believe the company's financials are on the rise. However, this approach may not be enough to offset the company's financial struggles. X has added some features, such as job listings and a new video tab, but there is little sign of the service Musk promised, which would be able to "manage someone's entire financial life" by the end of 2024.

The company's financial struggles are also overshadowed by Musk's AI ambitions, with X increasingly becoming a testing ground for his artificial intelligence projects. This shift in focus raises questions about the company's long-term viability and its ability to compete in the social media landscape.

The news highlights the challenges Musk faces in turning around X, which has been plagued by controversy and financial struggles since his acquisition. As the company struggles to break even, the sale of debt by banks may be a sign of things to come, and Musk will need to find a way to revitalize the platform and restore investor confidence.

The implications of X's financial struggles extend beyond the company itself, with potential ripple effects on the tech industry as a whole. As Musk's ambitions for X continue to evolve, it remains to be seen whether he can turn the company around and make it a viable player in the social media landscape.