Tesla CEO Elon Musk put a lot of his own money into buying Twitter earlier this year, and as a result, Twitter now owes him a lot of money.
Elon Musk is warning others about the risk of stock market panic, because he has experienced it himself. He says that by borrowing against the value of securities one owns, there is a chance that the market will go crazy and people will lose money.
Remember to avoid having margin debt in a stock market that is volatile – this can lead to a lot of extreme situations. And, as always, keep plenty of cash on hand in case things go wrong.
Tesla’s CEO, Elon Musk, bought Twitter back in March for $44 billion. He then saddled the company with $13 billion of debt. The news is that Musk’s bankers are considering replacing some of Twitter’s high-interest debt with new margin loans backed by Tesla stock that Musk would be personally responsible for paying back.
Tesla Margin-Loan Talks Show Pressure Mounting on Musk, Bankers
Tesla’s CEO, Elon Musk, sold a lot of shares recently, which caused the stock price to go down. He said he will stop selling shares soon, but we don’t know for how long.
The warning from Tesla’s CEO, Elon Musk, is ironic, because he has pledged a lot of his Tesla shares as collateral. As of December 2020, he had 92 million Tesla shares pledged.
If there are macroeconomic risks involved, it’s generally a good idea to avoid borrowing money on stocks, as they may move in ways that are unrelated to the long term potential of the company.