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by toss1
1307 days ago
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Excellent point, but how likely is a good outcome from this trade? Assume that Twitter is 90% likely to tank at least badly enough that he has to cover the loans, and that $30B is entirely collateralized with TSLA stock (vs Twitter or some other assets). That $30B is about 5.7% of the $527b market cap. Selling it all at once would certainly depress the stock. But would he have to do that, or just dump enough each month to make the payments? If that's over something like 5-10 years. it'd somewhat depress the curve, but enough to make a short work? If it's a 10-year timespan, it's more like 0.6% per year of 'extra' sales from the event, which seems getting down in the noise. Seems he's also make a variety of moves, e.g. a rollover loan, stock buybacks, etc. to minimize the impact on TSLA price... What am I missing here? |
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First, he can't sell any of that 5.7%. Collateral is an all or nothing deal, like any other loan. Technically who ever collects it may not sell it either, they may hold onto it rather than dump it, but it is entirely their decision.
Second, he owns about 21% of TSLA (so the web tells me). And Twitter lost 1.14B in 2020. That is likely to be a steeper loss this year. Selling 1+B / year - with very little end in sight to the pain - will eat into his remaining 15% share. Liquidating 1+ B a year of stock is not a trivial amount and it will not be looked on favorably by investors. It will signal his pet project is more important than his very serious business - a business where investors have been all to happy to short in the past.
IDK, just my opinion. Not financial advice, obviously.