Originally published at: Musk told Twitter investors they wouldn't lose money
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He’s run out of poop emojis?
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I’ve watched enough gangster movies to know what happens next.
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he’s scared shitless!
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Ok, but…did the investors actually believe him? Musk says a lot of things and they don’t have much of a track record.
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I’m guessing most people who take out loans assure their lenders that they’ll be good for the money. Hilarious that anyone would take Musk’s word at face value though, especially the banks.
I still suspect the Saudis were less interested in the potential value of Twitter than they were interested in buying themselves a powerful and well-connected American oligarch.
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Investors: “I’m sure the money’s safe. He’s the richest man in the world! There has to be a reason for that.”
Yeah, the reason for it is that people keep giving Elon Musk ridiculous amounts of money for fucking bullshit because they didn’t do their research.
Elno deserves a good clamping.
I still can’t believe how this all went down. Apparently Elno secured some of the loans with Tesla stock as collateral (goodbye to that), but the rest has… nothing. Elno so clearly didn’t have a plan for Twitter, was buying it far beyond its actual value, etc. that it’s insane to me that anyone could be so cavalier about forking over billions of dollars for this boondoggle. Elno couldn’t have put together a proposal for the purchase that wouldn’t have caused everyone to just immediately leave the room, so I’m guessing he didn’t have to - he just assured everyone he had a plan and the money was safe and despite his track record, everyone just handed him the money.
It really demonstrates, in the starkest possible way, how there’s an entirely different set of rules for the super-wealthy, and it doesn’t matter how one ends up in those ranks.
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Surely they didn’t give him unsecured loans. Why would any bank or financial institution do that? For anyone. Surely it’s at least secured by Xitter itself? That’s not looking like very valuable collateral, but it’s still better than an unsecured loan. Are these banks with shareholders? If so, this seems problematic, to say the least.
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Castration by clamping?
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I’ve read contradictory things, most recently that some of the loans had Tesla stock as collateral, but others seemingly weren’t secured at all? But this contradicts earlier reports I read that I understood to indicate that the loans were secured by Twitter itself, and if Elno couldn’t service the debt, he’d lose Twitter. Which is problematic enough when the value of Twitter dropped well below the value of the loans… (one of Musk’s more recent statements put the value of Twitter at 4 billion, and he’s got 13+ in loans).
It’s all inexplicable. Whatever the case, it all seemed like pretty extreme negligence except whoever gave loans secured by Tesla stock - Elno was buying a cash-negative business for far more money than it was worth and saddling it with a ton of debt, with obviously no plan for it to make more money. And those were the basic facts, not even taking into account that Elno clearly had no understanding of Twitter and was likely to (as he did) trash the place.
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According to this
[…]
Because of the way that Musk operates, the social-media company’s troubles pose a threat to his whole business empire. Despite being the second-wealthiest person in the world, Musk is curiously cash poor. He doesn’t take a salary from Tesla, and while he owns about 20% of the EV maker, public documents filed in March show that about 63% of those shares are “pledged as collateral to secure certain personal indebtedness.” […]
This is why using Tesla stock to source cash all the time gets hairy. If Tesla shares fall below a certain level, the banks can call in those personal loans — leaving Musk on the hook. And the quickest way for Tesla’s stock to drop off a cliff is for investors to get wind of a big Musk sale. And of course, he needs to make sure that he still holds on to all the Tesla stock he’s pledged as collateral to the banks. Unfortunately, though, the easiest way for Musk to fill the gaping hole in Twitter’s balance sheet is to sell Tesla shares. You see how this could be a problem.
Sometimes, when he’s really hard up, Musk borrows money from SpaceX — a private company that lost a combined $1.5 billion in 2021 and 2022. He borrowed $1 billion from the company when he bought Twitter and paid the loan back within a month — but he had to sell $4 billion worth of Tesla shares to do it. Using his wealth and power, Musk has built himself a separate reality where there are no real consequences for the risks he takes, but keeping the lights on at Twitter — sorry, X — is testing its limits more and more by the day.
[…]
It’s an interesting read. Rocket Boy won’t make it into orbit and burn in re-entry.
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Well, he was kinda right, throwing away != losing.
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That sort of enormous loss doesn’t affect hyper-rich people. They can offset it against their taxes.
I´m sorry, “taxes”? /s
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With the banks, it sometimes takes a while for them to wake up. In their greed, they tend to get bamboozled by charismatic rich con artists. All the major banks lent Biff money for decades on the basis of his assurances that he was the best, really the classiest businessman in America. It was only in the 2010s that the non-distressed ones stopped.
That and shutting down or monitoring a channel for dissent against the Bonesaw regime. As fossil-fuel pushers who have a symbiotic relationship with the big incumbent American car manufacturers, they also have an interest in taking a large stake in Tesla via the collateral.
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Can too!
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Although considering how overvalued Tesla stock is that doesn’t seem all that bright either. ISTR that at peak it had a market valuation of something like 2x Ford or GM
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Don’ know that it’s that low. As of yesterday, ~17x for either, which is completely absurd.
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The banks don’t worry him. “If you owe a million to the bank you’re in trouble. If you owe a billion to the bank, the bank is in trouble.” What should concern Musk is the money he owes MBS in Saudi Arabia. Banks don’t use bone saws.
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Rational actors all.
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