Tech

Elon Musk warns against margin debt over market risks of ‘mass panic’


Billionaire Elon Musk is warning about what he himself has done – borrow against the value of securities one owns – because of the risk of “mass panic” in the stock market.

Billionaire Elon Musk is warning about what he himself has done – borrow against the value of securities one owns – because of the risk of “mass panic” in the stock market.

“I strongly advise people not to have margin debt in a volatile stock market and you know, from a cash standpoint, keep the dough dry,” Musk said in the All-In podcast. on Friday. “You can see some pretty extreme things happening in a bear market.”

CEO of Tesla Inc. spent billions of his own money when he bought Twitter Inc. for $44 billion earlier this year and left the company with $13 billion in debt. Bloomberg News reported that Musk’s bankers are considering replacing some of the high-interest debt he paid on Twitter with new Tesla stock-backed margin loans that he will take on. responsibility to pay back.

Tesla margin loan talks show growing pressure on Musk, Bankers

He also liquidated nearly $40 billion of Tesla stock, a move that helped push the stock to a two-year low. Following the latest sale, this week, Musk again said he would stop selling shares, adding that the pause could last for two years or longer.

The warning, at least the second one issued by Musk this month, is ironic because the billionaire has previously pledged Tesla share. As of December 2020, Musk has pledged 92 million Tesla shares as collateral, according to an April 2022 SEC filing.

during that time audio filesMusk also reiterated his belief that the economy is long overdue for a recession and that a recession could be similar in size to that seen in 2009.

“My best guess is we have stormy periods for a year to a year and a half, and then dawn comes around in the second quarter of 2024, which is my best guess.” Musk said. “Booms don’t last forever, but neither does recessions.”


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