And if he gets called, after a high selloff? (TSLA is known for its high volatility, many provoked by Musk itself.)
I suppose itās overcollateralized. Or maybe not, and if it isnāt at least 100% collateralized, there will be a high leverage factor.
A lot of leveraged investors (giving shares as collateral) get burned. The last known whale, Hwang/Archegos Capital Management, had a huge impact in his family office and in the investment banks that allowed his leveraged trades (today, Hwang was arrested).
We donāt know if Musk have given some stocks as collateral on other previous situations.
For example, to finance his other projects and even to buy meme cryptos.
Net worth isnāt necessarily 100% accepted as collateral. As lenders can refuse some types of collateral. (E.g. having a loan and giving cryptos as collateral or if accepted, as it is very volatile, the lenders could demand a higher overcollateralization. Or for example, other iliquid or exotic assets given as collateral.)
Bottom-line. Musk could be worth 264bn, but lenders only accept a % of it as potential collateral (not considering/accepting some as collateral).
EDIT:
PS: Banks have regulations that classifies their balance sheet assets according to their risk, with risky assets penalizing the banksā capital requirements/stress tests.
Afaik, it was disclosed thah below 5% of twitter accounts were fake, by the board/internal report. However it seems likely that number is more then claimed 5%ā¦
Does it slightly annoy you that Musk has become bigger than both TWTR (and also TSLA). Both have become what I now call ācelebrity stocksā. The man himself has become a bigger spectacle than the actual companies.
That said I know many will gain a decent profit once the sell off takes place, myself included.
Itās seem like Musk would rather find a way to get out of this deal, pay the 1million get out clause and offer a lower share price for the company purchase.
Heās right to make sure Twitters numbers are correct. The real amount of bots and fake accounts will obviously turn out to be far more than they said, lowering the value.
Personally i think heās opening a can of worms with this one.
I donāt believe a single thing musk says nowadays, his ego is completely out of control. Twitters lawyer group look like an absolute dream team, that wouldnāt take on a case they arenāt likely to win.
I donāt think heāll be forced to buy it fwiw, but an incoming Tesla share dump and a significant shareholder settlement are coming IMO.
Or just be contrarian to Musk public statements. His statements are made deliberately to influence the price movements. In the past, it was for Tesla stock, he was hit by SEC numerous times, then he went to Wild West Crypto World (no regulator to punish him), now that crypto bubble is bursting, he turned to stocks.
There was a trading halt from the exchange because of the high volatility (halt it automatic when the best selling price is also the highest price in the book for 10min straight, and conversely on the downside.)
