Elon Musk after all introduced the Twitter deal on maintain due to faux accounts:
Hilarious such a worth delicate announcement to Twitter inventory introduced on Twitter, and that Tesla been proven to be a serial offender with bots on Twitter:
…however I digress.
The truth, is that with Tesla inventory buying and selling in the direction of $700 earlier than the announcement, Musk was over-leveraged each by the debt convenants on the $12.5 million mortgage and Tesla’s personal debt to excellent fairness limits – no shock he’s now making an attempt to switch that with various financing:
(little question Tesla fanbois’ will declare this a large coincidence)
While nearly all of Musk obsessed media simply repeats what they’re fed, just a few have been awake to the huge over-leveraging, not simply by the debt covenants, but additionally by the truth that Tesla by-laws solely allowed him as CEO to carry debt of 25% of the worth of his excellent shares towards them – their math slightly off, however not less than on the precise path:
There have been an incessant variety of errors made on this takeover deal:
I did cowl the maths in a earlier publish, however acquired little consideration, because it was not adoring of Musk after all:
Shorting Twitter above $50 was an apparent play when the deal particulars emerged – the possibility did not final lengthy as critical traders started to understand Musk was over-leveraged.
Tesla shares have bounced as many traders realise the literal compelled promote down of Tesla inventory Musk was going through with the inventory within the low $700’s by the debt covenants, the 25% debt to holdings Tesla rule and even the precise margin mortgage at round. The $ thresholds have dropped slightly since my authentic article as Musk offered $8.5 billion Tesla shares to fund the deal. As has been reported within the latest weeks as nicely Tesla’s disclosure of Musk share possession have been proven to be old-fashioned.