It's hard to navigate comments, but I cannot find the important stuff being discussed. I mean: how the hell can he even remotely viably secure $43B in cash?! All this "$200B net worth" is pretty much bullshit — it's multiplying current stock price by the amount he holds. (Hugely overpriced stock, in his case.) Sure, he can borrow insane amounts of money using this stock as a leverage, but no way it can be even close to $40B! Right?
Overcollateralized loans are a real thing, & when used right offer substantial opportunities in risk hedging, leveraging, & limit sells. He'll need to post ~$55B in stocks to make it happen, but it's doable.
No, I am sure this happens, but at $50B, really? Maybe I don't understand something, but the absolute amount sound impossible to me. I mean, no matter how much collateral you are going to offer, to borrow the money, you need somebody, who can lend you that money. It's not like you can ask for $50B in a pawnshop. Sure, you are gonna split it between 10 banks, it's still a lot.
That is, it has to be an institution that can move so wast amounts of cash, that these billions Musk borrows are kind of insignificant in comparison. And the collateral Musk offers must look nice specifically to them.
Now, how are they going to price the collateral? I don't understand where you got $55B from, but all risks taken into account it still has to represent what they think the stock will cost after the deal. Surely Musk fanboys may believe TSLA is underpriced, but you are not gonna deal with them, you are gonna deal with the analysts of that financial institution. And no matter how much more optimistic than me you/they are, what do you think will happen to Tesla stock if Musk sells even 30% of what he owns? I'd think he may as well offer "$200B worth" Tesla stock, as per today's market price. It still can turn into rubble the moment after it becomes public knowledge and Musk fanboys start selling theirs.
I mean, it would be hard enough to buy $50B for gold. Harder still to buy gold for $50B. But to borrow $50B for Tesla & SpaceX stock? Really? Am I underestimating things? Do such crazy deals actually happen?
> No, I am sure this happens, but at $50B, really? Maybe I don't understand something, but the absolute amount sound impossible to me. I mean, no matter how much collateral you are going to offer, to borrow the money, you need somebody, who can lend you that money. It's not like you can ask for $50B in a pawnshop. Sure, you are gonna split it between 10 banks, it's still a lot.
If it needs to be done, the underwriting of a $50+B asset-backed security loan is possible, with TSLA stock put up as collateral. The undertaking would be massive, but it can be done.
> I don't understand where you got $55B from
I took the $43B and multiplied it by 1.25, and then rounded that up and added 1 to make the number hit 55.
Truthfully, an overcollateralization ratio of 55/43 ~= 1.279 is more than comfortable to underwrite such a loan under normal circumstances. If, however, the asset is too volatile, then the ratio can be cranked upwards to 1.3 or 1.5 for greater assurances, which would require more stock, but if it needs to be done, then it could be.
> Surely Musk fanboys may believe TSLA is underpriced, but you are not gonna deal with them, you are gonna deal with the analysts of that financial institution. And no matter how much more optimistic than me you/they are, what do you think will happen to Tesla stock if Musk sells even 30% of what he owns? I'd think he may as well offer "$200B worth" Tesla stock, as per today's market price. It still can turn into rubble the moment after it becomes public knowledge and Musk fanboys start selling theirs.
Oh, there's no doubt that the stock is in astro-hype levels of speculation right now, that's the case. Everyone knows this, but no one wants to be the spoilsport to ruin the party for everyone else.
> I mean, it would be hard enough to buy $50B for gold. Harder still to buy gold for $50B. But to borrow $50B for Tesla & SpaceX stock? Really? Am I underestimating things? Do such crazy deals actually happen?
Honestly, given the course of human history, I wouldn't be surprised if it does happen. People can do crazy things if they want to, from the aspirational moon landings, to the depraved war-mongerings & degenerative market speculations: It's part of the human package, both the good & bad parts of it.
Yea it's not complicated for a large financial institution to underwrite the offer. Plus he still plans to keep as many shareholders as he can still involved when it goes private so his final ownership percentage will be much lower.
