On: Musk announces funding secured for Twitter buy

[mywittyname]

Musk's net worth his highly volatile. Telsa is trading at pretty high 200 P/e, one bad quarter could crater the stock price. Space X is private, which carries its own issues. Add to that the risk to these assets if Musk dies. Or hell, even it Musk merely "spooks" investors with his flamboyance.

This is a insanely risky vanity project.

[littlestymaar → mywittyname]

No matter how volatile his worth is, it's just around a tens of the said worth and there's no way it loses 90% of its value overnight, even if TSLA's valuation is arguably nonsensical.

[mywittyname → littlestymaar]

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 → mywittyname]

And what? Can't he just add more securities as a collateral if it happens?

[HWR_14 → littlestymaar]

If 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 → HWR_14]

Why would he have tu up up almost 4x the loan amount? He just needs to cover the loan.

[HWR_14 → tekknik]

When 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 → HWR_14]

You 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.