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PaperclipPerfector  15d ago (text post)   32208 thread views

Culture War Roundup for the week of April 7, 2025

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The paragraph even gives a ratio! "100 times". If he borrowed at the same ratio against every bit of stock he had, that would total to about $3B liquid, not $100B. He could free up a lot more wealth by selling stock rather than borrowing against it, but I wouldn't want to guess how much he'd tank the stock by doing so. It's not that there aren't enough potential shareholders out there to buy it, it's that everyone would be very wary of buying stock in a company whose CEO is dumping it en masse.

By this logic acquisitions would not be possible because it would tank the market. It's simply a legal transfer of ownership records from one entity to another. Nothing is sold on the market. Musk can sell his shares to an investment bank at a discount using dark pools or OTC , the bank books an instant profit and hedges it. musk gets his cash.

No; in an acquisition you have someone willing to sell overbalanced by someone else heavily motivated to buy. The buyer generally initiates the transaction, so is apparently more motivated, so instead of the stock tanking it rises by an acquisition premium.

Here, you would have Musk trying to unload $100B of a stock with a P/E over 100, balanced by ... which bank do you think wants that? They could get a 1% return with less risk by buying $25B of T-bills and stuffing the other $75B in their mattresses. TSLA commands such a high P/E because many investors believe there's still massive room for growth there, but would they maintain that belief in the face of the CEO trying to divest as fast as possible? Most wouldn't. The old joke about how "if you see the bomb squad tech running, try to keep up" applies to any knowledge imbalance of that magnitude. Could be Musk really wants to lose a third of his net worth just to bump military spending by 10% for one year; could be the tech just really needs to pee. The smart money still runs.

They can stipulate the terms of the loan in such a way as to ensure and profit and mitigate the risk of the volatility with hedging instruments. I think he could probably get $100 billion by pledging 300% collateral, which is his whole net worth.

Here, you would have Musk trying to unload $100B of a stock with a P/E over 100, balanced by ... which bank do you think wants that?

Elon has already successful borrowed tens of billions to Fund X/Twitter buyout. not $100 billion worth, but there was a counterparty.

I think he could probably get $100 billion by pledging 300% collateral, which is his whole net worth.

According to the quote you posted, he's been borrowing 1% of his collateral when taking out personal loans, right? 33% is a much harder sell.

Elon has already successful borrowed tens of billions to Fund X/Twitter buyout.

That's a better example, I admit. His personal loans there were $6.25B backed by $62.5B of Tesla stock. I wouldn't say that deal turned out great overall for his lenders and partners, but despite that I wouldn't be surprised if he could pull off 10% again - if TSLA dropped 90% it would be at a solid P/E for a value stock, regardless of how strongly Musk was signaling that he might have lost faith in it's nominal value.

Acquisitions often take the form of shareholder propositions for [party] to buy the stock for a given price, which is usually higher than the current price. They don't often occur purely as market orders, which would be vulnerable to price changes, that I've seen, although the buyer often has a decent ownership position to start with. Maybe the SEC requires or strongly incentivises the shareholder vote structure, though.

It's like civil forfeiture. The govt. becomes the new owner even though nothing is sold.

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