For the world’s richest man, cash flow has become the central paradox. Elon Musk has masterfully assembled a portfolio of companies poised to dominate the 21st century—from electric vehicles and artificial intelligence to space exploration. Yet, this empire is currently navigating a precarious financial moment. As interest rates remain elevated and the staggering costs of capital expenditure (depreciation) mount, Musk is turning to his crown jewel, SpaceX, to rescue a web of debt that threatens to destabilize his broader ambitions.
Recent moves out of Musk’s camp reveal a high-stakes strategy: merge failing entities with successful ones, restructure debt ahead of a blockbuster IPO, and pray that the revenue from rockets can outrun the interest payments from social media. Here is a breakdown of the debt levels across Musk’s key companies and an analysis of their bankruptcy risk.
The xAI and X Debacle: A $18 Billion Weight
The epicenter of the financial stress lies within X (formerly Twitter) and xAI, Musk’s artificial intelligence venture. Following the chaotic $44 billion acquisition of Twitter in 2022, Musk saddled the platform with a $12.5 billion debt financing package. This burden has proven toxic. Even after rebranding to X and merging with xAI in March 2025, the financial hangover remains severe.
Currently, the combined entity (xAI Holdings) is dealing with a cumulative debt stack of nearly $18 billion . This is broken down into the original Twitter loans and an additional $5 billion in debt taken on by xAI to purchase Nvidia chips and build out AI data centers .
The immediate danger here is interest. Reports indicate that the company is paying “tens of millions” of dollars in interest every single month just to service the old Twitter debt . With creditors previously wary of Musk’s content moderation policies scaring away advertisers, the terms of this debt are punitive. Banks like Bank of America, Barclays, and Mitsubishi UFJ held the bag for years, finally offloading the last of it in 2024 at a discount and a high fixed rate of 9.5% .
Compounding this is the issue of depreciation and cash burn. While xAI generated some revenue (approx. $107 million in a recent quarter), it was burning through nearly $1 billion per month on infrastructure . Without the lifeline from SpaceX, xAI was rapidly depleting its resources.
The Tesla Paradox: Cash Rich, Capex Hungry
Tesla presents a unique picture. On paper, the electric vehicle maker is financially healthy regarding traditional debt. Data from February 2026 shows Tesla holds approximately $6.7 billion in long-term debt against a massive cash reserve of $44 billion . By traditional metrics, Tesla is not at risk of defaulting on loans.
However, the “interest and depreciation” crunch hits Tesla in a different way: capital expenditure (capex) . As Musk pivots the company toward “physical AI”—including the Optimus robot and a Robotaxi network—the spending is going parabolic.
Morgan Stanley recently warned that Tesla’s “burn” mode is about to impact short-term profits. The firm estimates Tesla will face a staggering $81 billion cash consumption in 2026, driven by capital expenditures expected to exceed $20 billion . This spending is necessary to stay competitive, but the depreciation on this new infrastructure will weigh heavily on future earnings. While bankruptcy is not a near-term concern for Tesla given its cash pile, the immense spending is a bet that strains investor patience and free cash flow.
The SpaceX Lifeline: Merger and IPO
This brings us to SpaceX, the anomaly in Musk’s empire. Unlike X or Tesla’s capex cycle, SpaceX is a cash cow. In 2025, it generated an estimated $16 billion in revenue with a stunning $8 billion operating profit, driven by Starlink’s 9 million subscribers and lucrative government contracts .
It is this strength that Musk is now leveraging. In early February 2026, SpaceX announced it would acquire xAI, merging the entities in a deal valuing the combined company at a massive $1.25 trillion .
Why? The move is widely viewed not just as a synergy play for space-based AI data centers, but as a rescue mission. Bankers at Morgan Stanley, Goldman Sachs, and JPMorgan are now working on a financing plan to refinance the high-interest debt from the xAI side ahead of a planned SpaceX IPO later this year . By merging the entities, SpaceX can use its strong balance sheet and public market narrative to secure cheaper financing, effectively bailing out the struggling X platform.
Likelihood of Bankruptcy: A Segmented View
So, will interest and depreciation “crush” these companies? The answer depends entirely on which company you look at:
· X / xAI (Now part of SpaceX): High Risk (Absent the Merger). If xAI stood alone, it would be facing a severe liquidity crisis. The interest burden alone is a drain, and the cash burn rate is unsustainable. However, because it is now effectively being absorbed by SpaceX, the immediate bankruptcy risk shifts from “imminent” to “managed.”
· SpaceX: Low Risk. SpaceX is the financier of last resort. It is profitable and has a clear path to an IPO. The risk here is that the xAI debt becomes a drag on SpaceX’s valuation. Analysts have noted that SpaceX shareholders are benefiting less from this merger than xAI stakeholders . If the combined entity stumbles in its IPO or if Starlink’s growth slows, the market could punish the stock. However, a traditional bankruptcy is highly unlikely.
· Tesla: Low Risk (Short-term), Medium Risk (Long-term Execution). Tesla isn’t going bankrupt because of old debt; it has too much cash. The risk is that the company’s massive spending on AI and robotics (depreciation) fails to produce the promised returns. If the Robotaxi and Optimus narratives falter, the stock price could collapse, making future capital raises difficult and expensive. The “crush” here is on shareholder value and operational efficiency, not immediate solvency .
Conclusion
Elon Musk is playing a high-wire act without a net. By merging xAI with SpaceX, he is using one of the most successful private companies in the world to absorb roughly $18 billion in high-interest debt . This move alleviates the immediate “crush” of interest payments on X and xAI, buying them time and cleaner books ahead of a public offering.
However, it transfers the risk to SpaceX. The question for investors is whether the “world’s most successful venture” can carry the weight of Musk’s least successful acquisition (Twitter) into an IPO without buckling. If it succeeds, it secures Musk’s AI future. If it fails, the dream of Mars could be dragged down by the debt of a social media platform.