3 ms·
It doesn't need to lose 90% of its value overnight, 30% is enough to trigger a call on margin loans. Within the past year, Telsa stock slide from a $1209/sh pe
by mywittyname 5y ago
It doesn't need to lose 90% of its value overnight, 30% is enough to trigger a call on margin loans.
Within the past year, Telsa stock slide from a $1209/sh peak to $766/sh in the span of about five months.
- littlestymaar 5y agoAnd what? Can't he just add more securities as a collateral if it happens?
- HWR_14 5y agoIf he has it. At standard margin rates, he'd need to put up ~$140 billion in TSLA stock to cover his TWTR offer. How much can TSLA slide before he doesn't have that. Keep in mind, private companies (SpaceX, Twitter in this hypothetical) cannot be used for margin purposes.
- tekknik 5y agoWhy would he have tu up up almost 4x the loan amount? He just needs to cover the loan.
- HWR_14 5y agoWhen using stock as collateral for a loan, it's not uncommon to get a loan for 30% of the value of the stock. Certainly not 100%. In this case, MS has offered him a loan for 20% of the value of his stock.
- tekknik 5y agoYou can still sell the rest of the stock and cover a majority of the loan. I still fail to see why you need way more money than the loan amount to pay it off.