World

The billionaire Warns Against Margin Debt On Risk Of Market ‘Mass Panic’

The billionaire Elon Musk is warning warned against something he himself has done — borrowing against the value of securities one owns — because of the risk of “mass panic” in the stock market.

Elon Musk said, “I would really advise people not to have margin debt in a volatile stock market and you know, from a cash standpoint, keep powder dry,” in the All-In podcast released on Friday. “You can get some pretty extreme things happening in a down market.”

Also read: Elon Musk: The richest slips to number 2, Adani on 3rd stratum

The billionaire put up billions of his own money when he purchased Twitter Inc for US$44 billion (RM194.68 billion) earlier this year and saddled the company with US$13 billion of debt. According to the reported data, Elon Musk’s bankers are considering replacing some of the high-interest debt he layered on Twitter with new margin loans backed by Tesla stock that he would be personally responsible for repaying.

Tesla Margin-Loan Talks Show Pressure Mounting on Musk, Bankers

The billionaire has also disposed of nearly US$40 billion of Tesla’s shares, a move that contributed to driving the stock to a two-year low. Following the latest sales, Musk again said last week he would stop selling shares, adding that the pause could last for two years or so.

The warning, at least the second made by Musk this month, is ironic given the billionaire had previously pledged his Tesla shares. Elon had 92 million Tesla shares pledged as collateral as of December 2020, according to an US Securities and Exchange Commission filing in April 2022.

Also read: Elon Musk Pledge To Keep Tesla Stocks For Next Two Years

During the podcast, Musk also reiterated his belief that the economy was overdue for a recession and that the slowdown could be similar to the scale seen in 2009.

“My best guess is that we have stormy times for a year to a year-and-a-half, and then, dawn breaks roughly in [the second quarter of] 2024, that’s my best guess, “The billionaire Elon Musk said. “Booms don’t last forever, but neither do recessions.”

Also read: “Twitter Live” Episode 7: The FBI & The Hunter Biden Laptop

Spriha Rai

Recent Posts

Amit Shah Approves Rs 1,950 Crore Advance Release To Karnataka And Maharashtra For Flood Relief

The Central Government has allocated substantial financial assistance to various States for disaster response and…

2 hours ago

Our Hearts Are Fuller Than Ever: Parineeti Chopra And Raghav Chadha Welcome Their Baby Boy

Bollywood actress Parineeti Chopra and her husband, politician Raghav Chadha, have become proud parents to…

3 hours ago

WhatsApp Tests Monthly Message Cap To Curb Spam And Unwanted Chats

WhatsApp is preparing to roll out a major update designed to curb spam and unwanted…

4 hours ago

Bullet Discovery At Hyderabad Metro Sparks Police Investigation

A 9 mm bullet was found in a commuter’s bag at Hyderabad’s Moosapet Metro Station,…

5 hours ago

Karnataka High Court Allows RSS Centenary March In Chittapur; Seeks Fresh Application

The Karnataka High Court on Sunday granted approval for the RSS centenary march to take…

6 hours ago

Neurosurgeon Reveals Everyday Habits That Gradually Harm Brain Health

Neurosurgeon Dr Richard Veyna warns that poor sleep, stress, inactivity, and sugary diets can harm…

6 hours ago