Twitter's $13B in debt is secured by Elon Musk's TSLA shares, which have fallen something like 65 percent since he first started pursuing the Twitter deal. There is a real possibility Musk could get a margin call because the value of his collateral is no longer sufficient. Tesla simply isn't worth a P/E Ratio in the 30s. This market resolves YES if Musk is forced by his bank to put up additional collateral for his loans.
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This has stayed the same in the past seven months. There was no margin loan, Elon Musk did not personally put up Tesla shares as collateral (if he did, the interest rate would be much lower). Sounds like an easy NO, though I guess there's the possibility that Elon changes his mind, and decides to replace some of the debt with margin loans.
@MP I mean, I want to bet here and Musk can totally get a margin call, but it's on @BTE to prove that it's in anyway related to Twitter loans, even if it's a counterparty that is a Twitter creditor
Musk likely takes loans to buy jets and so crazy billionaire shit, there is no evidence whatsoever he put more capital into Twitter
@NeonNuke No not at all. Because of the $3.4B sale of Tesla Musk made after saying he wouldnβt do that is the biggest tell. This article actually says it probably happened last week when the stock hit around $125 so when it was at $105 this week he might have gotten ANOTHER MARGIN CALL. Why wouldnβt the bankers do that if they can? The banks are set to put the Twitter debt on the market so they arenβt just gonna be like βitβs okay Elon, we know your trying hard, we got youβ. No, they are gonna be like βdo you want to deal with us or Apollo?β
@BTE Well I'm confused because the article seems to say that he didn't get margin called and from what I've read twitter $13b in debt is not backed by Tesla stock. So while there may be a margin loan that Elon used to buy twitter it doesn't seem to be public knowledge.
@NeonNuke Well, the loan was secured by Twitter revenue, but that doesn't exist anymore so Musk, as the sole owner and operator, is singularly responsible for it. Selling Tesla stock or pledging shares are his only options. Why do you think Musk is not responsible for Twitter's debt?? That makes zero sense.
https://www.barrons.com/articles/tesla-elon-musk-margin-call-twitter-loan-51672328580 Looks like this has probably already happened. I canβt read this because of paywall but looking for additional info.
@jack That is a great point and something I thought about a little bit and I think it is very unlikely it will happen without us knowing because of his fiduciary duty at Tesla.
@jack He must report the percentage of his shares he has used as collateral for loans. Plus, his sales of Tesla shares tell us when he decides not to use the shares as collateral but instead puts up cash.
This is an interesting analysis I found while considering whether to make this market discussing Musk's choice to sell his shares instead of renegotiating with Twitter's bankers:
"The matter is made worse because Mr. Musk had a choice not to sell shares. Teslaβs proxy rules allow him to pledge shares of his company as collateral for loans, allowing him to raise cash without liquidating a single shred of equity. Closed-door negotiations also suggest that Morgan Stanley offered to provide margin loans for Mr. Musk. HeΒ decided to sell anyway. "
I suppose it is possible he has already gotten a margin call and he might not want to publicize that fact, but it will be hard for him to hide it. The resolution may ultimately require some inference based on other information, what are your thoughts about that? Am I bound to undermine my trustworthiness with this question no matter how I resolve it?
@BTE Ah true, there might be some reporting requirements (I don't know but that would make sense)
I think either of the following approaches could be reasonable - and there have been only 3 trades so far so it's still early enough to pick one I think:
Resolves YES if based on the available evidence, you subjectively believe it is likely that he was margin called
Resolves YES if reliable media reporting says he was margin called