SpaceX CEO Elon Musk at Met Gala 2022.
- Elon Musk has warned against borrowing against the value of the securities he owns because of the risk of a “mass panic” in the stock market.
- The Tesla CEO invested billions of his own money when he bought Twitter for $44 billion earlier this year and owed the company $13 billion.
- Musk’s bankers are considering replacing some of the high-interest debt he has amassed on Twitter with new margin loans backed by Tesla stock.
- For more financial news, visit the front page of News24 Business.
Billionaire Elon Musk is warning about what he did himself – borrowing money against the value of the securities he owns – because of the risk of a “mass panic” in the stock market.
“I would really advise people not to have debt on margin in a volatile stock market, and you know, in terms of cash flow, keep the powder dry,” Musk said on an All-Inclusive podcast released Friday. “You can get pretty extreme stuff in a bear market.”
The Tesla CEO invested billions of his own money when he bought Twitter for $44 billion earlier this year and saddled the company with $13 billion in debt.
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Bloomberg News reported that Musk’s bankers are considering replacing some of the high-interest debt he has amassed on Twitter with new Tesla stock-backed margin loans, for which he will be personally responsible.
He also sold almost $40 billion worth of Tesla shares, which helped push the stock to its lowest level in two years. Following the latest sell-off, Musk again said this week that he would stop selling shares, adding that the pause could last about two years.
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The warning, at least the second one issued by Musk this month, is ironic given that the billionaire has already mortgaged his Tesla shares. As of December 2020, Musk had 92 million Tesla shares as collateral, according to a filing with the SEC in April 2022.
During the podcast, Musk also reaffirmed his belief that a recession in the economy is long overdue and that the recession could be the same as in 2009.
“My best guess is that we have storm periods from a year to a year and a half, and then dawn around the second quarter of 2024, this is my best guess,” Musk said. “Booms don’t last forever, and neither do recessions.”