How Did Musk Acquire Twitter?

How Did Musk Acquire twitter?

Most investors have been appalled by the decisions Mr. Musk has taken to fund projects that at the end of the day have shown productive, and, granted, although expectations and doubts have been erased for few months or even years, still difficult to believe that someone who has the experience of Mr. Musk, with IPOS or managing shares, would minimize the risk of investing at this stage and age. Elon Musk has for years intertwined his personal business ventures with his stake in the auto maker, using those holdings to help finance his 44 billion purchase of twitter, bringing that connection to a deeper level.

How did he fund the Twitter venture?

A key part of the funding part includes borrowing 12.5 billion from loans backed by more than $62.5 billion worth of Tesla’s shares that Mr. Musk owns-or about 40% of his stake, at Wednesday closing price of $881.51 Tesla and several banks have put in place rules that would require Musk to put up more collateral if the company’s shares prices fall.

Using Wednesday price Mr. Musk would need to satisfy the banks with more collateral if Tesla shares were to fall 43% to around $504. In that case the banks would require a rebalancing that would call for an additional $14 billion or 28.5 million shares at that level. That’s on top of of the 70.9 million shares needed at Wednesday’s price for the original collateral.

What does investors have to do with Musk’s decisions?

At the end of the day. is Mr. Musk’s money and shares, (one would say), the problem here or overarching story of Tesla stock, has been one growth: rising more than 18000% since going public in 2010. But like Tuesday when stock fell 12% as investor’s digest among other things, what Mr. Musk’s involvement in Twitter might mean for other parts of his empire, the stock has been highly volatile. Tesla shares are down more than 20%. Since April 4 after the balked at joining the twitter board, setting him on a path to bidding for the company.

Musk’s Debts

At the end of 2021, Mr. Musk had 173 million Tesla shares no counting his options, about half his stake was already promised as collateral for personal loans, according to the most recent public record last year. Pledging doesn’t necessary indicate that actual borrowing against those shares has occurred, the filling said, the most recent public filling in late 2020 said Mr. Musk personally owed a combined $4525 million to Morgan Stanley , Goldman Sachs and Bank of America. Mr. Musk has long built his personal financial house on a complicated web of loans back by his ownership stakes in the companies he backed , including his privately held rocket company space exploration technologies corp.

Conclusion

Investor have realized more and more that Musk has turn Tesla into a gambling parlor, thus, they have been previously warned of the risk that stock sale by Mr. Musk to cover loans could cause share prices to fall.

Ps- Please check our article on Space x and its quest for a better future click here