So the real story here is that he was in danger of getting margin called on the loan he took to buy Twitter which he financed with TSLA shares as collateral, and this is him moving money around so he doesn't have to face the reality of actually getting margin called amid a sinking TSLA, right?
There's two issues with that theory: (a) Somebody in another thread mentioned that margin for those loans would trigger at around $120, so assuming that's true TSLA has another 50% to lose before it would happen. (b) Even if that was the case and TSLA lost those 50%, that would mean he'd have to cover the loans with cash. He cannot use xAI shares for that because contrary to TSLA it is not a publicly traded company. There is no open market price that lenders could accept. So, he didn't gain anything by moving money around, he'd still need to get the cash from somewhere.
Twitter started with $13 billion in debt and now has $12 billion, so was only able to make $1 billion in profit in about two and a half years. Twitter was making around $500 billion a quarter before the Apple ad targeting changes that Meta was able to recover from back to more than their profitability before the changes, so if Twitter only got back to ~$100 billion a quarter they failed pretty hard in comparison to Meta despite how much more efficient they were supposed to be, but he got political control out of it, and now acquired a ton of political control from poaching Tesla AI employees from himself for a new startup during the biggest AI boom in history with no significant further development of Tesla's AI training hardware and many of Tesla's top researchers moved over.
Virtually all of his wealth is in the stock of his companies.
He can't sell large amounts of stock in one go or it would trigger the price to crater.
Rich people with lots of wealth tied up in stocks will often borrow money from banks at low interest rates and use stock as collateral. This is common knowledge.
If the stock dips too much, the bank can call in the loan/make him put up more collateral, because the original collateral is worth less.
Elon does not have billions in cash or other liquid capital just sitting around. He would need to sell a lot of stock to see that money and that would cause him a lot of problems.
Yeah basically. I don’t know that he was fearing a direct margin call but this is pretty blatantly just using the xai entity to save the x entity so it doesn’t endanger his Tesla house of cards. And it’s obvious in these comments who has really worked with a lot of privately held mildly shady sister companies deeply enough to understand these kinds of deals and who is just arm-chairing.
