WaPo Headline: The flawed math behind Elon Musk’s Twitter deal
Subheadline: An overleveraged billionaire’s bid for an overvalued company may signal the last gasp in an age of magical thinking about markets
By Steven Pearlstein
Yesterday at 9:04 a.m. EDT
https://archive.ph/6AtwU
According to Tesla’s regulatory filings, Musk had already pledged about half of his 173 million shares of Tesla stock to fund other ventures and activities. He has now pledged an additional 40 percent to secure the new loans to buy Twitter. That leaves only 10 percent of his Tesla shares available as collateral. Because Tesla’s policies allow major shareholders to borrow only 25 percent of the value of each share that is pledged, that would appear to limit further borrowing against his Tesla shares to less than $5 billion.
All that borrowing might work out just dandy as long as the value of the collateral — Tesla stock (TSLA) — remains at or near the $1,000 per share it was trading at when the deal was announced last week. Yet in the week since the announcement, it dropped 15 percent, to $870, at least in part out of fear that the stock could get caught up in Musk’s Twitter misadventure. Should it fall below $750, Musk could run afoul of Tesla’s own leverage ratio. And if it were to fall much below $600, the banks could demand that Musk pony up additional collateral, requiring him to quickly sell some of his shares.
Should Tesla stock fall below $400, the banks would probably demand immediate repayment, triggering a massive, forced sale of Tesla shares, depressing the share price even further and prompting other investors to bail out of the stock.
This was an excellent article.
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Puck, I agree, and it was brought to my attention by one of the best forensic accountants I follow on Twitter.
PucksFool, as a Twitter reader, I have had to block more bots from $TSLA than any other bots. Not even the Russians or Trumplings used bots as much as Tesla, so these two paragraphs were not a shock to me. I would have ventured more than 1 in 10, though.
https://archive.ph/6AtwU#selection-971.0-1036.0
From the WaPo article:
But according to a recent study by David Kirsch and Mohsen Chowdhury of the Smith School of Business at the University of Maryland, those 84 million users following Musk on Twitter didn’t just show up on their own. Many were cultivated by bots — fake accounts programmed to respond to tweets by or about Musk or Tesla with tweets crafted to boost the company’s reputation, driving the momentum investing that’s inflated the tech bubble. The robots, they wrote, were also programmed to troll critics of the company with nasty or threatening messages.
Using a software program called Botometer, Kirsch and Chowdhury found that of 1.4 million tweets from the top 400 accounts posting to the “cashtag” $TSLA, 1 in 10 were from bots.
While it’s unclear who is behind the bot effort, and the two researchers are still working on directly linking tweets to movements in Tesla stock, the data “raises questions,” they write, about whether the activity was part of an organized effort to boost Tesla’s price.
Puck, I agree, and it was brought to my attention by one of the best forensic accountants I follow on Twitter.
This morning Tesla Daily had an update on Elon Musk’s Twitter financing. With the additional investors the margin loan commitment drops from $12.5 billion to $6.25 billion
? Elon Musk files updated Twitter paperwork disclosing new investors
https://www.youtube.com/watch?v=39eKShysdjg&t=360s
WaPo’s Jeff Bezos is no fan of Elon Musk, he sued because he lost a NASA bid to SpaceX. Musk twitted something like “Jeff should spend less on lawyers and more on rocket science.”
The Captain
Crypto Giant Binance To Invest $500,000,000 in Twitter Amid Elon Musk’s Social Media Buyout
Daily Hodl Staff May 5, 2022 BLOCKCHAIN
https://dailyhodl.com/2022/05/05/crypto-giant-binance-to-inv…
Leading crypto exchange Binance says it will invest $500 million into Twitter alongside billionaire Elon Musk, who purchased the social media platform for $44 billion last month.
In a new blog post, Binance announced it is investing in the social media giant because they believe Musk’s acquisition will help bring about the fusion of social media and Web 3.0 services.
Binance also believes the acquisition will accelerate the adoption rate of crypto assets and blockchain technologies.
As stated by Binance CEO Changpang Zhao,
“We’re excited to be able to help Elon realize a new vision for Twitter. We hope to be able to play a role in bringing social media and Web 3.0 together and broadening the use and adoption of crypto and blockchain technology.”