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Actually, if you know what you are talking about, this filing actually shows Elon is about 21 billion dollars short. This is because 21 billion dollars of the c

Actually, if you know what you are talking about, this filing actually shows Elon is about 21 billion dollars short. This is because 21 billion dollars of the commitment is coming from him and not from any financial institution. He is a very rich man but almost his entire wealth is tied up in tesla shares which he cannot sell in such large amounts and ownership of spacex which is even harder to sell. If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. So no, once again he does not have funding secured. And once again he is trying to bullshit his way around the issue, although this time the bullshitting is a little more sophisticated. It is still possible that he tries to sell a lot of tesla shares to get the cash to buy twitter, but it is unlikely.

bcrl 5y ago
Or he'll trade TSLA shares for TWTR. I can imagine that some investors in TWTR would be happy to take him up on such an offer.
- weeblewobble 5y ago
  If TWTR holders want to trade for TSLA they can simply do it on the open market
  - motoxpro 5y ago
    When you see "Acquired for 50% cash and 50% stock" this is a company "trading" x shares for y shares. So yeah this happens all the time not in the open market.
  - jay00 5y ago
    Not for the premium he's offering to take it private.
  - HWR_14 5y ago
    This is true. But if he was talking about trading shares of SpaceX for TWTR I would probably rearrange my holdings.
- blake1 5y ago
  Not in this case: this is a tender offer, and what you're describing is a merger. Which might actually make sense, but it would be something that goes through the TSLA board, and can't be done unilaterally by Musk. Of course, he must be supremely influential with the board, but there is a governance structure that can't just be bypassed.
layer8 5y ago
He’d have no trouble borrowing money against his assets though. As far as I know, that’s what most billionaires do.
- FiberBundle 5y ago
  Even billionaires don't just borrow $21 billion.
  - robonerd 5y ago
    'Just' is doing a lot of work in this assertion.
  - mise_en_place 5y ago
    He just borrowed $25.5 billion[0]. So your assertion is false. The issue is coming up with $21 billion worth of equity which is contingent upon TSLA stock price. >[0]https://twitter.com/exec_sum/status/1517137710699458560?s=21&t=TX8wURwMzS-knEBE7jmCjg https://twitter.com/exec_sum/status/1517137710699458560?s=21...
- kingbirdy 5y ago
  There are limits to how much he can borrow against his assets, both due to banking risk models and Tesla bylaws. He's too close to those limits already to borrow another $20B.
  - rcMgD2BwE72F 5y ago
    How wrong you were. https://www.reuters.com/business/musk-tears-up-buyout-playbook-with-465-bln-twitter-financing-2022-04-22/ https://www.reuters.com/business/musk-tears-up-buyout-playbo... "Musk himself has committed to put up $33.5 billion, which will include $21 billion of equity and $12.5 billion of margin loans against some of his Tesla Inc (TSLA.O) shares to finance the transaction"
  - rcMgD2BwE72F 5y ago
    >He's too close to those limits already to borrow another $20B. What are the limits and where is he now? Please tell us.
darawk 5y ago
He can easily get a loan against the value of his shares for this, combined with his own personal wealth (he recently sold a huge amount of stock, he has lots of cash on hand). It's not bullshit at all.
theknocker 5y ago
nojito 5y ago
Why does he have to sell a single share? He routinely takes out loans against his shares to disturbingly high levels.
- hristov 5y ago
  He is trying to take out a loan here as well. One of the letters included in the story is actually a margin loan commitment from morgan stanley. But that was for only 12.5 billion. This was all he could get against his shares. It does seem low in comparison with the value of his shares, but banks are well aware of the self reinforcing negative spiral a margin call can have on a share price and will not give out massive margin loans. My point is that even after he got the maximum loan he could get, and then got the maximum margin loan against his shares, he is still 21 billion short.
  - jhugo 5y ago
    You don't know that those are the largest loans he was able to get. They might just be the largest loans he wanted to get.
    - lkxijlewlf 5y ago
      But why? Why would this be the number he wanted?
      - jhugo 5y ago
        The loans have different risk characteristics than his equity stake, he balances risk by deciding how much of his own money to put in vs. how much borrowed money to put in. (There is no doubt a ceiling — how much of his own money he is able to put in — but there's no reason to assume he wouldn't invest less than that ceiling.) If you have enough cash to buy a house, you might sensibly still take out a mortgage, and you'll need to decide how much cash to put down as a deposit vs. how much to borrow. (The bank will likely set a lower limit for the amount of cash, but you might choose to put down more.) Someone could ask you "why did you choose that number", and you'd give a similar answer.
bfz 5y ago
I may be mistaken, but I believe he can achieve $21bn in short exposure to Tesla through swaps and never have to report the "sale" publicly
- kgwgk 5y ago
  If he needs $21bn in cash, how does $21bn in short exposure to Tesla through swaps help?
rcMgD2BwE72F 5y ago
>If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. So why didn't the stock price collapsed when he sold $15B in December 2021? https://www.reuters.com/markets/deals/teslas-musk-says-he-sold-enough-stock-slams-california-overtaxation-2021-12-22/ https://www.reuters.com/markets/deals/teslas-musk-says-he-so...
- hristov 5y ago
  Well if you needed further proof, look at the Tesla price action today. It is doubtful that Musk has even started selling, but the price is already collapsing.
- hawk_ 5y ago
  because selling another $21b of tesla would indicate he has found other more interesting things to do.
  - rcMgD2BwE72F 5y ago
    He bought ~9% of Twitter already. I'm sure his co-shareholders prefer that he takes control over companies he bought in, because he can then easily develop synergies (cf. Boring Co and Tesla, SpaceX and Tesla, SolarCity and Tesla, etc).
    - gopher_space 5y ago
      The problem with this idea is that nobody's really on Twitter for the free speech. He might take the company to new and exciting places, but it won't be with the current userbase.
  - kjksf 5y ago
    Or, following Ockham's Razor, it would indicate he needs money to do something with it. Maybe buy $600 million yacht or maybe buy money losing company.
- hristov 5y ago
  He sold that over two months and the overall market was much stronger then. Also those sales were pretty much required for taxes and thus did not send a negative signal to the market. If he sells large amounts of tsla shares to buy twitter, this will be a negative signal -- any other tesla shareholder can sell tesla shares to buy twitter, and why wouldn't they when the tesla CEO is doing it. It is still possible that he tries to raise 21 billion by selling stock but I doubt it. First if he actually wanted to do that, he would keep quiet while selling and then come out with the tender offer when he had the cash.
rockinghigh 5y ago
> If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. Elon Musk is routinely selling billions of dollars: https://finance.yahoo.com/quote/TSLA/insider-transactions?p=TSLA https://finance.yahoo.com/quote/TSLA/insider-transactions?p=... * $1,007,908,791 on Dec 28, 2021 * $333,647,031 on Dec 22, 2021 * $594,924,622 on Dec 22, 2021 * $325,723,600 on Dec 21, 2021 * $528,016,861 on Dec 21, 2021 * $738,683,277 on Dec 13, 2021 As long as the trade is small compared to the daily volume, the market impact is limited.
NationalPark 5y ago
I wonder how Tesla shareholders feel about this situation. It seems like by leveraging with his Tesla shares, he's passing on the risk to everyone who owns Tesla stock. If they have a couple bad quarters or some kind of macro change happens and the price starts going down, Musk gets margin called and has to dump his stock on the market, which could start a spiral of panic-selling or even open Tesla itself to being corporate-raided.
- kjksf 5y ago
  As a shareholder, Musk multiplied my money by 20x Even though I'm obviously so much smarter than him on matter of acquiring public companies, I'll graciously allow him to do whatever he pleases as long as he continues growing Tesla at 50% compounded rate. Which he did this quarter, and the one before that and the one before that. I'll be concerned when that stops happening. Until then I give him my blessing to do whatever he pleases with HIS money.
  - deleted 5y ago
    [deleted]
  - NationalPark 5y ago
    Well yeah, of course you would be concerned if that stopped happening, even more so if it means the CEO is suddenly compelled sell a bunch of his stock at a discount to avoid violating his debt covenants. You don’t get any upside from the twitter deal, so unless you think Musk will use Twitter to boost Tesla’s price (suppressing bad news?), it seems like all downside for current Tesla owners.
    - robonerd 5y ago
      > so unless you think Musk will use Twitter to boost Tesla’s price (suppressing bad news?) Or bullying American politicians. Or simply preventing himself from being banned.
      - AndrewUnmuted 5y ago
macksd 5y ago
As someone who doesn't really know what they're talking about, I'm also wondering how he would be getting around the widely-reported "poison pill", even if he did have $21B more.
- jhugo 5y ago
  By asking the board to remove it. If faced with a serious tender offer backed by financing and accepted by a majority of shareholders, the board would find it difficult not to allow it to go ahead (by removing the poison pill). That doesn't mean they couldn't refuse to remove it, but since they should act in the interests of the shareholders, they would need a good explanation (e.g. another better offer, or a plausible plan for extracting more value from Twitter than they currently do).
  - xg15 5y ago
    So, total noob here in that whole area, but I have a question about fiduciary duty. The popular understanding seems to be that a companies' board is legally bound to act in the best (financial) interests of the shareholders - and only those. This is why hostile takeovers are a thing at all: If the acquiring company gets the majority of the target's shareholders on board (or becomes the majority), then the target's board of directors is legally bound to accept the takeover, even if it would be harmful to the company (nevermind the company's employees or customers) How far does this go? If I'm a shareholder of McDonald's, could I sue them because they could have increased profits by lacing their burgers with cocaine but chose not to? (Or say some synthetic drug that's technically legal because it hasn't been banned yet). If a company could make more profit but is kept from it by some regulation, could I sue them if they didn't try to lobby against that regulation?
    - rurp 5y ago
      My understanding is that courts and regulators give board members a lot of deference on their decisions, as long as they are well considered and not obviously ridiculous. It's perfectly fine for a board to say that the legal and reputational risks far outweigh the benefits of lacing burgers with cocaine. Most decisions, such as lobbying, involve complicated calculous and don't have a simple way to verify the ROI. The board can defend most positions (from no lobbying to lots of lobbying) by arguing that they believe it's the right decision based on their experience, judgement, and analysis of the situation; probably with some written analysis defending whatever their decision was at the time.
exdsq 5y ago
He can just borrow the money. He’s the worlds richest man - he can borrow < 10% of his net worth against his Tesla stocks if he wanted to.
- colinmhayes 5y ago
  The funding already includes a $12.5 billion loan against his tesla shares. He is limited by tesla by laws and banker risk aversion to how much loans he can take out against his shares. I would speculate that the $21 billion in his equity is there because he couldn't get more loans.
  - snowwrestler 5y ago
    And I believe he has already pledged other Tesla shares to secure previous loans.
TuringNYC 5y ago
>If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. He can execute an equity stock swap agreement with an investment bank and not unload any shares.
flabbergasted 5y ago
Seriously, how can I buy some of his shares of spacex?
- malfist 5y ago
  Easiest way? Buy Alphabet stock. They are a spacex investor. Otherwise you can't, it's a privately held company
  - jefftk 5y ago
    Looks like Alphabet owns ~7.5% of SpaceX. Alphabet is worth $1.67T; SpaceX is worth, say, $150B. This means ~$11B of Alphabet (~0.66%) is SpaceX. That is an extremely dilute method of gaining exposure to SpaceX! (Disclosure: I work for Google, which is part of Alphabet)
    - antonvs 5y ago
      Dilute is better than zero I suppose. Presumably the play is that SpaceX might end up controlling an extremely profitable Mars colony, creating the ultimate gigaunicorn, and making that 0.66% seem much bigger. This influx of cash will also allow Musk to become President of Earth, at which point even those with dilute indirect holdings in SpaceX will be sitting pretty. It's a classic long-term play really.
      - outworlder 5y ago
        My sarcasm detector is having a lot of trouble with this comment.
      - gigaflop 5y ago
        Well, he's just following the American model. Leave, displace and colonize, rebel, and declare sovereignty. To those who would follow him on such a mission? Sayonara. He's spoken about how it would be mostly work for those living there, and I wouldn't be surprised if he tried to implement a 9/9/6 schedule. I would trust Weyland Yutani with a Mars colony before I would trust EM.
mangoTangoBango 5y ago
Why can't he take out a loan against those shares?
- kgwgk 5y ago
  He's also doing that: https://www.bloomberg.com/opinion/articles/2022-04-21/elon-got-his-money https://www.bloomberg.com/opinion/articles/2022-04-21/elon-g... Elon Musk needs about $46.5 billion to buy Twitter at $54.20 per share: about $39.4 billion to pay for the 91% of Twitter’s stock that he doesn’t currently own, about $4.3 billion of debt to refinance and various miscellaneous costs. To pay that, he has: A letter from his banks offering to lend $13 billion to Twitter, if he buys it, with $7 billion of that coming in the form of senior secured bank loans and $6 billion coming in the form of junk bonds. A letter from his banks offering to lend him $12.5 billion personally, secured by $62.5 billion worth of his Tesla Inc. stock. At yesterday’s closing price, that comes to about 64 million shares, or about one-third of his Tesla stake. An agreement with himself to put up the other $21 billion, give or take.
deleted 5y ago
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michelb 5y ago
Isn’t Musk set to receive a 23 billion dollar bonus for performance?
skeeter2020 5y ago
Forgive my ignorance, but rich people routinely get access to cash secured with their assets though, so why can't he do that, pledging his huge equity ownership?
- zdragnar 5y ago
  It is still borrowed, which means still needs paying back. If you don't care about the stocks (i.e. they are only an investment vehicle) this is fine. Musk controls Tesla by way of owning more than 50% of its stock. He'd be trading Tesla for Twitter, which I think anyone would agree is a terrible trade.
  - giobox 5y ago
    What? He's the single largest shareholder, but even recently its approx 17 percent of Tesla he owns. Musk hasn't owned more than 50% of the stock anytime Tesla has been a public company.
    - HWR_14 5y ago
      Which is about the same percentage of AMZN that Bezos owner pre-divorce. Interesting.
anon_12012020 5y ago
Funding is secured via multiple strategies that best fits the case. How can you possibly think he does not have funding secured, when in fact he has more options than anyone private citizen in the world right now? Ludicrous
- JumpCrisscross 5y ago
  > How can you possibly think he does not have funding secured, when in fact he has more options than anyone private citizen in the world right now? He’s already margined a lot of his Tesla shares. The rest is largely illiquid. Tesla shares are expensive to margin, especially for $10bn; we’re seeing an unusually-large consortium of banks assemble to provide that tranche of financing. That implies having to sell large, market-moving stakes in, all likelihood, Tesla and/or SpaceX. Something feasible, but unlikely pleasant for Musk or other shareholders in those names. Also, Musk is someone who said “funding secured” without funding secured in 2018.
  - jefftk 5y ago
    > Musk is someone who said “funding secured” without funding secured in 2018. Yes, though that was a Tweet and not an SEC filing
    - JumpCrisscross 5y ago
      > that was a Tweet and not an SEC filing Most people, at this point, believe he has funding. When he first tweeted his bid, however, the stock dropped. He still has to come up with $21bn. He’s tapped out on margin loans, so that will involve some selling of assets. And market conditions are volatile enough for those funding commitments to fall through.
      - bombcar 5y ago
        Some portion of that remainder can come from TWTR shareholders who are willing to go private.
dlivingston 5y ago
> So no, once again he does not have funding secured For the reader’s consideration: Musk’s TED interview [0], he claims (quite forcefully) that he did in fact have funding secured, but effectively “pled not secured” as to get a more favorable response from the SEC. [0]: (time stamp: 0h27m00s) https://youtu.be/cdZZpaB2kDM https://youtu.be/cdZZpaB2kDM
- dtparr 5y ago
  Because he keeps going around saying that in public, there was a recent request for a restraining order to stop him from repeating it since it poisons the jury pool. It quoted the US District Court's ruling from 1 April of this year[0]: "the evidentiary record demonstrated that no reasonable jury could find Musk’s tweets on August 7, 2018 accurate or not misleading. Likewise, given that Musk was intimately involved with the facts leading to that conclusion, the Court also held that he recklessly made the statements with knowledge as to their falsity" Which is to say, a federal judge has ruled that it was inaccurate, and he knows it was inaccurate. [0] - https://storage.courtlistener.com/recap/gov.uscourts.cand.330489/gov.uscourts.cand.330489.395.1.pdf https://storage.courtlistener.com/recap/gov.uscourts.cand.33...
  - kjksf 5y ago
    Actually, the judge just denied plaintiffs motion saying it's too broad. First Amendment strikes again! https://www.cnet.com/news/politics/elon-musk-doesnt-have-to-keep-quiet-about-tesla-shareholder-lawsuit/ https://www.cnet.com/news/politics/elon-musk-doesnt-have-to-...
    - dtparr 5y ago
      Right, he denied the TRO, but that doesn't change the prior ruling regarding the accuracy of the tweet. Also "accuracy of the tweet" is a horrible thing to have to be debating in a court of law.
      - kjksf 5y ago
titzer 5y ago
> If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. Stock swap agreements are a thing. He doesn't have to outright sell them on the open market to get cash. Even if he did, it's not like the price is going to crater because he's losing confidence in TSLA or something.
- kgwgk 5y ago
  According to wikipedia: An equity swap is a financial derivative contract (a swap) where a set of future cash flows are agreed to be exchanged between two counterparties at set dates in the future. That kind of arrangement doesn't get you cash today, does it?
  - titzer 5y ago
    That was not what I was referring to. https://www.investopedia.com/terms/s/stock-swap.asp https://www.investopedia.com/terms/s/stock-swap.asp While this case wouldn't be TSLA acquiring Twitter, stocks are fungible assets that can be traded as part of an agreement.
    - kgwgk 5y ago
      Oh, I misundertood. I thought that when you said that "he doesn't have to outright sell them on the open market to get cash" you were referring to an alternative way of getting cash - not to an alternative form of payment. I'm not even sure that it would be really feasible, in any case it would surely be very unusual. As that link says, the way it goes normally is: "A stock swap occurs when shareholders' ownership of the target company's shares is exchanged for shares of the acquiring company." But here people would not be getting shares of the acquiring company, they would be getting shares of an unrelated company. There is no reason why they would want to keep those shares, so they would quickly flood the market.
      - outworlder 5y ago
        Unless a contract specifies that they cannot do that for a certain period of time.
anonygler 5y ago
You can absolutely take out low interest loans using your stock as collateral. That's how the wealthy pay for many things.
- kevin_thibedeau 5y ago
  It's how they scrape by on a $1 salary so they can engineer themselves into a lower tax bracket.
  - AndrewUnmuted 5y ago
    This is pretty misleading. Don't you think the government's forcing "income" to be defined as w2 salary has a lot to do with why this happens, and is therefore an important qualifier? They literally invented a new industry by arbitrarily restricting terminology. Those loans would never exist if we did not pray on individual earners to "fund" the government's "services."
hristov 5y ago
Sorry to respond to my own post, but after writing it I ran across and article in Bloomberg that basically confirms what I am saying. Apparently Musk is looking for equity partners to provide the 21 billion equity part of twitter's bid. https://www.bloomberg.com/news/articles/2022-04-21/musk-is-said-to-vet-potential-equity-partners-for-twitter-bid?sref=RGipqWit https://www.bloomberg.com/news/articles/2022-04-21/musk-is-s...
- hkdobrev 5y ago
  The SEC filing shows there's now a commitment to provide that equity investment. Elon Musk has formed a Delaware corporation which investors could invest into to provide the money behind the "Equity Financing". The article does not confirm your point and your top comment is misleading.
kurupt213 5y ago
Maybe he has 21 billion available in his margin account on Robinhood
deleted 5y ago
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winternett 5y ago
For far less than $21 billion of investment I, or many other people, could redevelop and scale an entirely new social platform that would outpace Twitter, and I could probably do it multiple times over until it succeeds... The goal seems rather "Captain Ahab-ish" in nature... I think the story is quickly turning into more of a hype effort than actual advancement. Twitter would still need time and labor to be re-worked, which in itself is a massive undertaking. It looks like Twitter has multiple problems in scaling beyond it's current state, and that's why it has only made gradual changes over time for many years.
auspex 5y ago
Or just takes a loan against his shares
tomcam 5y ago
u mad bro?
polishdude20 5y ago
This brings about an interesting question. If I've got $1000 in cash, that's valuable because I have it now and I can spend it now without many strings. When we talk about billionaires we look at the 21 billion musk has in Tesla and just extrapolate that $1000 in the pocket but to $21 billion in elons pocket. But in reality, he doesn't REALLY have 21 billion because he can't actually spend it all.
csense 5y ago
Some quick searching says TSLA is about $1000 and Elon owns 178M Tesla shares. Assuming Elon owns all those shares free and clear, aren't there plenty of investment banks that would eagerly loan Elon the $21B if Elon pledges ~63M of those shares as collateral? (I got the 63M number from assuming the lender requires collateral value equal to 3x the loan to protect against price drops.) Then presumably Elon would sell 21M TSLA over the next year or three to pay off the loan and get the other 42M of collateral out of hock, but sell slowly enough not to crash the price of TSLA.
elisharobinson 5y ago
once again HN demonstrates how much it does not know anything . he does not need to own 100% , 51% is well and good. musk + jack + ark invest + JPM already have 25% they need to get the other 26% which should be very achievable with tesla stock . All SEC fillings aside this is pretty much a done deal .
xbmcuser 5y ago
He does not need to sell he could get a loan by using his shares as collateral
recursivequine 5y ago
You clearly don't know what you're talking about. A holding company is responsible for the 21 billion. Elon happens to have created & owned that holding company. It's a perfect vehicle for him to allow private investors

bcrl 5y ago

Or he'll trade TSLA shares for TWTR. I can imagine that some investors in TWTR would be happy to take him up on such an offer.

weeblewobble 5y ago
If TWTR holders want to trade for TSLA they can simply do it on the open market
- motoxpro 5y ago
  When you see "Acquired for 50% cash and 50% stock" this is a company "trading" x shares for y shares. So yeah this happens all the time not in the open market.
- jay00 5y ago
  Not for the premium he's offering to take it private.
- HWR_14 5y ago
  This is true. But if he was talking about trading shares of SpaceX for TWTR I would probably rearrange my holdings.
blake1 5y ago
Not in this case: this is a tender offer, and what you're describing is a merger. Which might actually make sense, but it would be something that goes through the TSLA board, and can't be done unilaterally by Musk. Of course, he must be supremely influential with the board, but there is a governance structure that can't just be bypassed.

layer8 5y ago

He’d have no trouble borrowing money against his assets though. As far as I know, that’s what most billionaires do.

FiberBundle 5y ago
Even billionaires don't just borrow $21 billion.
- robonerd 5y ago
  'Just' is doing a lot of work in this assertion.
- mise_en_place 5y ago
  He just borrowed $25.5 billion[0]. So your assertion is false. The issue is coming up with $21 billion worth of equity which is contingent upon TSLA stock price. >[0]https://twitter.com/exec_sum/status/1517137710699458560?s=21&t=TX8wURwMzS-knEBE7jmCjg https://twitter.com/exec_sum/status/1517137710699458560?s=21...
kingbirdy 5y ago
There are limits to how much he can borrow against his assets, both due to banking risk models and Tesla bylaws. He's too close to those limits already to borrow another $20B.
- rcMgD2BwE72F 5y ago
  How wrong you were. https://www.reuters.com/business/musk-tears-up-buyout-playbook-with-465-bln-twitter-financing-2022-04-22/ https://www.reuters.com/business/musk-tears-up-buyout-playbo... "Musk himself has committed to put up $33.5 billion, which will include $21 billion of equity and $12.5 billion of margin loans against some of his Tesla Inc (TSLA.O) shares to finance the transaction"
- rcMgD2BwE72F 5y ago
  >He's too close to those limits already to borrow another $20B. What are the limits and where is he now? Please tell us.

darawk 5y ago

He can easily get a loan against the value of his shares for this, combined with his own personal wealth (he recently sold a huge amount of stock, he has lots of cash on hand). It's not bullshit at all.

theknocker 5y ago

nojito 5y ago

Why does he have to sell a single share? He routinely takes out loans against his shares to disturbingly high levels.

hristov 5y ago
He is trying to take out a loan here as well. One of the letters included in the story is actually a margin loan commitment from morgan stanley. But that was for only 12.5 billion. This was all he could get against his shares. It does seem low in comparison with the value of his shares, but banks are well aware of the self reinforcing negative spiral a margin call can have on a share price and will not give out massive margin loans. My point is that even after he got the maximum loan he could get, and then got the maximum margin loan against his shares, he is still 21 billion short.
- jhugo 5y ago
  You don't know that those are the largest loans he was able to get. They might just be the largest loans he wanted to get.
  - lkxijlewlf 5y ago
    But why? Why would this be the number he wanted?
    - jhugo 5y ago
      The loans have different risk characteristics than his equity stake, he balances risk by deciding how much of his own money to put in vs. how much borrowed money to put in. (There is no doubt a ceiling — how much of his own money he is able to put in — but there's no reason to assume he wouldn't invest less than that ceiling.) If you have enough cash to buy a house, you might sensibly still take out a mortgage, and you'll need to decide how much cash to put down as a deposit vs. how much to borrow. (The bank will likely set a lower limit for the amount of cash, but you might choose to put down more.) Someone could ask you "why did you choose that number", and you'd give a similar answer.

bfz 5y ago

I may be mistaken, but I believe he can achieve $21bn in short exposure to Tesla through swaps and never have to report the "sale" publicly

kgwgk 5y ago
If he needs $21bn in cash, how does $21bn in short exposure to Tesla through swaps help?

rcMgD2BwE72F 5y ago

>If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. So why didn't the stock price collapsed when he sold $15B in December 2021? https://www.reuters.com/markets/deals/teslas-musk-says-he-sold-enough-stock-slams-california-overtaxation-2021-12-22/ https://www.reuters.com/markets/deals/teslas-musk-says-he-so...

hristov 5y ago
Well if you needed further proof, look at the Tesla price action today. It is doubtful that Musk has even started selling, but the price is already collapsing.
hawk_ 5y ago
because selling another $21b of tesla would indicate he has found other more interesting things to do.
- rcMgD2BwE72F 5y ago
  He bought ~9% of Twitter already. I'm sure his co-shareholders prefer that he takes control over companies he bought in, because he can then easily develop synergies (cf. Boring Co and Tesla, SpaceX and Tesla, SolarCity and Tesla, etc).
  - gopher_space 5y ago
    The problem with this idea is that nobody's really on Twitter for the free speech. He might take the company to new and exciting places, but it won't be with the current userbase.
- kjksf 5y ago
  Or, following Ockham's Razor, it would indicate he needs money to do something with it. Maybe buy $600 million yacht or maybe buy money losing company.
hristov 5y ago
He sold that over two months and the overall market was much stronger then. Also those sales were pretty much required for taxes and thus did not send a negative signal to the market. If he sells large amounts of tsla shares to buy twitter, this will be a negative signal -- any other tesla shareholder can sell tesla shares to buy twitter, and why wouldn't they when the tesla CEO is doing it. It is still possible that he tries to raise 21 billion by selling stock but I doubt it. First if he actually wanted to do that, he would keep quiet while selling and then come out with the tender offer when he had the cash.

rockinghigh 5y ago

> If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. Elon Musk is routinely selling billions of dollars: https://finance.yahoo.com/quote/TSLA/insider-transactions?p=TSLA https://finance.yahoo.com/quote/TSLA/insider-transactions?p=... * $1,007,908,791 on Dec 28, 2021 * $333,647,031 on Dec 22, 2021 * $594,924,622 on Dec 22, 2021 * $325,723,600 on Dec 21, 2021 * $528,016,861 on Dec 21, 2021 * $738,683,277 on Dec 13, 2021 As long as the trade is small compared to the daily volume, the market impact is limited.

NationalPark 5y ago

I wonder how Tesla shareholders feel about this situation. It seems like by leveraging with his Tesla shares, he's passing on the risk to everyone who owns Tesla stock. If they have a couple bad quarters or some kind of macro change happens and the price starts going down, Musk gets margin called and has to dump his stock on the market, which could start a spiral of panic-selling or even open Tesla itself to being corporate-raided.

kjksf 5y ago
As a shareholder, Musk multiplied my money by 20x Even though I'm obviously so much smarter than him on matter of acquiring public companies, I'll graciously allow him to do whatever he pleases as long as he continues growing Tesla at 50% compounded rate. Which he did this quarter, and the one before that and the one before that. I'll be concerned when that stops happening. Until then I give him my blessing to do whatever he pleases with HIS money.
- deleted 5y ago
  [deleted]
- NationalPark 5y ago
  Well yeah, of course you would be concerned if that stopped happening, even more so if it means the CEO is suddenly compelled sell a bunch of his stock at a discount to avoid violating his debt covenants. You don’t get any upside from the twitter deal, so unless you think Musk will use Twitter to boost Tesla’s price (suppressing bad news?), it seems like all downside for current Tesla owners.
  - robonerd 5y ago
    > so unless you think Musk will use Twitter to boost Tesla’s price (suppressing bad news?) Or bullying American politicians. Or simply preventing himself from being banned.
    - AndrewUnmuted 5y ago

macksd 5y ago

As someone who doesn't really know what they're talking about, I'm also wondering how he would be getting around the widely-reported "poison pill", even if he did have $21B more.

jhugo 5y ago
By asking the board to remove it. If faced with a serious tender offer backed by financing and accepted by a majority of shareholders, the board would find it difficult not to allow it to go ahead (by removing the poison pill). That doesn't mean they couldn't refuse to remove it, but since they should act in the interests of the shareholders, they would need a good explanation (e.g. another better offer, or a plausible plan for extracting more value from Twitter than they currently do).
- xg15 5y ago
  So, total noob here in that whole area, but I have a question about fiduciary duty. The popular understanding seems to be that a companies' board is legally bound to act in the best (financial) interests of the shareholders - and only those. This is why hostile takeovers are a thing at all: If the acquiring company gets the majority of the target's shareholders on board (or becomes the majority), then the target's board of directors is legally bound to accept the takeover, even if it would be harmful to the company (nevermind the company's employees or customers) How far does this go? If I'm a shareholder of McDonald's, could I sue them because they could have increased profits by lacing their burgers with cocaine but chose not to? (Or say some synthetic drug that's technically legal because it hasn't been banned yet). If a company could make more profit but is kept from it by some regulation, could I sue them if they didn't try to lobby against that regulation?
  - rurp 5y ago
    My understanding is that courts and regulators give board members a lot of deference on their decisions, as long as they are well considered and not obviously ridiculous. It's perfectly fine for a board to say that the legal and reputational risks far outweigh the benefits of lacing burgers with cocaine. Most decisions, such as lobbying, involve complicated calculous and don't have a simple way to verify the ROI. The board can defend most positions (from no lobbying to lots of lobbying) by arguing that they believe it's the right decision based on their experience, judgement, and analysis of the situation; probably with some written analysis defending whatever their decision was at the time.

exdsq 5y ago

He can just borrow the money. He’s the worlds richest man - he can borrow < 10% of his net worth against his Tesla stocks if he wanted to.

colinmhayes 5y ago
The funding already includes a $12.5 billion loan against his tesla shares. He is limited by tesla by laws and banker risk aversion to how much loans he can take out against his shares. I would speculate that the $21 billion in his equity is there because he couldn't get more loans.
- snowwrestler 5y ago
  And I believe he has already pledged other Tesla shares to secure previous loans.

TuringNYC 5y ago

>If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. He can execute an equity stock swap agreement with an investment bank and not unload any shares.

flabbergasted 5y ago

Seriously, how can I buy some of his shares of spacex?

malfist 5y ago
Easiest way? Buy Alphabet stock. They are a spacex investor. Otherwise you can't, it's a privately held company
- jefftk 5y ago
  Looks like Alphabet owns ~7.5% of SpaceX. Alphabet is worth $1.67T; SpaceX is worth, say, $150B. This means ~$11B of Alphabet (~0.66%) is SpaceX. That is an extremely dilute method of gaining exposure to SpaceX! (Disclosure: I work for Google, which is part of Alphabet)
  - antonvs 5y ago
    Dilute is better than zero I suppose. Presumably the play is that SpaceX might end up controlling an extremely profitable Mars colony, creating the ultimate gigaunicorn, and making that 0.66% seem much bigger. This influx of cash will also allow Musk to become President of Earth, at which point even those with dilute indirect holdings in SpaceX will be sitting pretty. It's a classic long-term play really.
    - outworlder 5y ago
      My sarcasm detector is having a lot of trouble with this comment.
    - gigaflop 5y ago
      Well, he's just following the American model. Leave, displace and colonize, rebel, and declare sovereignty. To those who would follow him on such a mission? Sayonara. He's spoken about how it would be mostly work for those living there, and I wouldn't be surprised if he tried to implement a 9/9/6 schedule. I would trust Weyland Yutani with a Mars colony before I would trust EM.

mangoTangoBango 5y ago

Why can't he take out a loan against those shares?

kgwgk 5y ago
He's also doing that: https://www.bloomberg.com/opinion/articles/2022-04-21/elon-got-his-money https://www.bloomberg.com/opinion/articles/2022-04-21/elon-g... Elon Musk needs about $46.5 billion to buy Twitter at $54.20 per share: about $39.4 billion to pay for the 91% of Twitter’s stock that he doesn’t currently own, about $4.3 billion of debt to refinance and various miscellaneous costs. To pay that, he has: A letter from his banks offering to lend $13 billion to Twitter, if he buys it, with $7 billion of that coming in the form of senior secured bank loans and $6 billion coming in the form of junk bonds. A letter from his banks offering to lend him $12.5 billion personally, secured by $62.5 billion worth of his Tesla Inc. stock. At yesterday’s closing price, that comes to about 64 million shares, or about one-third of his Tesla stake. An agreement with himself to put up the other $21 billion, give or take.

deleted 5y ago

[deleted]

michelb 5y ago

Isn’t Musk set to receive a 23 billion dollar bonus for performance?

skeeter2020 5y ago

Forgive my ignorance, but rich people routinely get access to cash secured with their assets though, so why can't he do that, pledging his huge equity ownership?

zdragnar 5y ago
It is still borrowed, which means still needs paying back. If you don't care about the stocks (i.e. they are only an investment vehicle) this is fine. Musk controls Tesla by way of owning more than 50% of its stock. He'd be trading Tesla for Twitter, which I think anyone would agree is a terrible trade.
- giobox 5y ago
  What? He's the single largest shareholder, but even recently its approx 17 percent of Tesla he owns. Musk hasn't owned more than 50% of the stock anytime Tesla has been a public company.
  - HWR_14 5y ago
    Which is about the same percentage of AMZN that Bezos owner pre-divorce. Interesting.

anon_12012020 5y ago

Funding is secured via multiple strategies that best fits the case. How can you possibly think he does not have funding secured, when in fact he has more options than anyone private citizen in the world right now? Ludicrous

JumpCrisscross 5y ago
> How can you possibly think he does not have funding secured, when in fact he has more options than anyone private citizen in the world right now? He’s already margined a lot of his Tesla shares. The rest is largely illiquid. Tesla shares are expensive to margin, especially for $10bn; we’re seeing an unusually-large consortium of banks assemble to provide that tranche of financing. That implies having to sell large, market-moving stakes in, all likelihood, Tesla and/or SpaceX. Something feasible, but unlikely pleasant for Musk or other shareholders in those names. Also, Musk is someone who said “funding secured” without funding secured in 2018.
- jefftk 5y ago
  > Musk is someone who said “funding secured” without funding secured in 2018. Yes, though that was a Tweet and not an SEC filing
  - JumpCrisscross 5y ago
    > that was a Tweet and not an SEC filing Most people, at this point, believe he has funding. When he first tweeted his bid, however, the stock dropped. He still has to come up with $21bn. He’s tapped out on margin loans, so that will involve some selling of assets. And market conditions are volatile enough for those funding commitments to fall through.
    - bombcar 5y ago
      Some portion of that remainder can come from TWTR shareholders who are willing to go private.

dlivingston 5y ago

> So no, once again he does not have funding secured For the reader’s consideration: Musk’s TED interview [0], he claims (quite forcefully) that he did in fact have funding secured, but effectively “pled not secured” as to get a more favorable response from the SEC. [0]: (time stamp: 0h27m00s) https://youtu.be/cdZZpaB2kDM https://youtu.be/cdZZpaB2kDM

dtparr 5y ago
Because he keeps going around saying that in public, there was a recent request for a restraining order to stop him from repeating it since it poisons the jury pool. It quoted the US District Court's ruling from 1 April of this year[0]: "the evidentiary record demonstrated that no reasonable jury could find Musk’s tweets on August 7, 2018 accurate or not misleading. Likewise, given that Musk was intimately involved with the facts leading to that conclusion, the Court also held that he recklessly made the statements with knowledge as to their falsity" Which is to say, a federal judge has ruled that it was inaccurate, and he knows it was inaccurate. [0] - https://storage.courtlistener.com/recap/gov.uscourts.cand.330489/gov.uscourts.cand.330489.395.1.pdf https://storage.courtlistener.com/recap/gov.uscourts.cand.33...
- kjksf 5y ago
  Actually, the judge just denied plaintiffs motion saying it's too broad. First Amendment strikes again! https://www.cnet.com/news/politics/elon-musk-doesnt-have-to-keep-quiet-about-tesla-shareholder-lawsuit/ https://www.cnet.com/news/politics/elon-musk-doesnt-have-to-...
  - dtparr 5y ago
    Right, he denied the TRO, but that doesn't change the prior ruling regarding the accuracy of the tweet. Also "accuracy of the tweet" is a horrible thing to have to be debating in a court of law.
    - kjksf 5y ago

titzer 5y ago

> If he tries to sell 21 billion dollars worth of tesla shares, the share price will collapse. Stock swap agreements are a thing. He doesn't have to outright sell them on the open market to get cash. Even if he did, it's not like the price is going to crater because he's losing confidence in TSLA or something.

kgwgk 5y ago
According to wikipedia: An equity swap is a financial derivative contract (a swap) where a set of future cash flows are agreed to be exchanged between two counterparties at set dates in the future. That kind of arrangement doesn't get you cash today, does it?
- titzer 5y ago
  That was not what I was referring to. https://www.investopedia.com/terms/s/stock-swap.asp https://www.investopedia.com/terms/s/stock-swap.asp While this case wouldn't be TSLA acquiring Twitter, stocks are fungible assets that can be traded as part of an agreement.
  - kgwgk 5y ago
    Oh, I misundertood. I thought that when you said that "he doesn't have to outright sell them on the open market to get cash" you were referring to an alternative way of getting cash - not to an alternative form of payment. I'm not even sure that it would be really feasible, in any case it would surely be very unusual. As that link says, the way it goes normally is: "A stock swap occurs when shareholders' ownership of the target company's shares is exchanged for shares of the acquiring company." But here people would not be getting shares of the acquiring company, they would be getting shares of an unrelated company. There is no reason why they would want to keep those shares, so they would quickly flood the market.
    - outworlder 5y ago
      Unless a contract specifies that they cannot do that for a certain period of time.

anonygler 5y ago

You can absolutely take out low interest loans using your stock as collateral. That's how the wealthy pay for many things.

kevin_thibedeau 5y ago
It's how they scrape by on a $1 salary so they can engineer themselves into a lower tax bracket.
- AndrewUnmuted 5y ago
  This is pretty misleading. Don't you think the government's forcing "income" to be defined as w2 salary has a lot to do with why this happens, and is therefore an important qualifier? They literally invented a new industry by arbitrarily restricting terminology. Those loans would never exist if we did not pray on individual earners to "fund" the government's "services."

hristov 5y ago

Sorry to respond to my own post, but after writing it I ran across and article in Bloomberg that basically confirms what I am saying. Apparently Musk is looking for equity partners to provide the 21 billion equity part of twitter's bid. https://www.bloomberg.com/news/articles/2022-04-21/musk-is-said-to-vet-potential-equity-partners-for-twitter-bid?sref=RGipqWit https://www.bloomberg.com/news/articles/2022-04-21/musk-is-s...

hkdobrev 5y ago
The SEC filing shows there's now a commitment to provide that equity investment. Elon Musk has formed a Delaware corporation which investors could invest into to provide the money behind the "Equity Financing". The article does not confirm your point and your top comment is misleading.

kurupt213 5y ago

Maybe he has 21 billion available in his margin account on Robinhood

deleted 5y ago

[deleted]

winternett 5y ago

For far less than $21 billion of investment I, or many other people, could redevelop and scale an entirely new social platform that would outpace Twitter, and I could probably do it multiple times over until it succeeds... The goal seems rather "Captain Ahab-ish" in nature... I think the story is quickly turning into more of a hype effort than actual advancement. Twitter would still need time and labor to be re-worked, which in itself is a massive undertaking. It looks like Twitter has multiple problems in scaling beyond it's current state, and that's why it has only made gradual changes over time for many years.

auspex 5y ago

Or just takes a loan against his shares

tomcam 5y ago

u mad bro?

polishdude20 5y ago

This brings about an interesting question. If I've got $1000 in cash, that's valuable because I have it now and I can spend it now without many strings. When we talk about billionaires we look at the 21 billion musk has in Tesla and just extrapolate that $1000 in the pocket but to $21 billion in elons pocket. But in reality, he doesn't REALLY have 21 billion because he can't actually spend it all.

csense 5y ago

Some quick searching says TSLA is about $1000 and Elon owns 178M Tesla shares. Assuming Elon owns all those shares free and clear, aren't there plenty of investment banks that would eagerly loan Elon the $21B if Elon pledges ~63M of those shares as collateral? (I got the 63M number from assuming the lender requires collateral value equal to 3x the loan to protect against price drops.) Then presumably Elon would sell 21M TSLA over the next year or three to pay off the loan and get the other 42M of collateral out of hock, but sell slowly enough not to crash the price of TSLA.

elisharobinson 5y ago

once again HN demonstrates how much it does not know anything . he does not need to own 100% , 51% is well and good. musk + jack + ark invest + JPM already have 25% they need to get the other 26% which should be very achievable with tesla stock . All SEC fillings aside this is pretty much a done deal .

xbmcuser 5y ago

He does not need to sell he could get a loan by using his shares as collateral

recursivequine 5y ago

You clearly don't know what you're talking about. A holding company is responsible for the 21 billion. Elon happens to have created & owned that holding company. It's a perfect vehicle for him to allow private investors