MUSK IS ABOUT TO TAKE OVER TWITTER WITH AN AUTOCRATIC TWEAK: HE'LL MAKE IT A PRIVATE HOLDING COMPANY BY BORROWING OVER $25 BILLION, WITH TESLA BEING USED FOR COLLATERAL. IT'S ALL "FREE SPEECH" AND MARGIN CALLS. BEST WISHES.

 

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At $44 billion take over of Twitter in Elon Musk's "free speech" crusade, that no one really buys as the sole reason.  Except for former president Donald Trump who is eager to get back onto the Twitter platform under Musk's template of [extreme] right wing "inclusion".  I know, humorist world play/s.  But the idiocy of the Culture Wars that mostly revolve around Lew Rockwell's and wonky economist Murry Rothbard's (d1995) paleolibertarian 1990 manifesto, which was cherry picked by the so called Alt-Right, oppressively believing that there is a communist take over of America is no more than paranoia.  But, alas, if you have the money, you'll make the play.  And Musk has done it, although there maybe some caveats before creating an autocratic social media platform without any public accountability.  That, even though companies that are publicly listed are, in some cases, just as autocratic.   Musk wants to do away with advertising, so that accountability would not effect the user content.    So revenue will be subscription reliant, which may be hard to convince the end user how far this platform could move across to the right wing of politics and merge within conspiracy theories, to which Musk has aligned himself with.

Twitter could end up becoming, which it is already in someways, a multi billionaire dollar echo chamber.

But with structural issues aside on Musk's takeover, the financial costs in this one sided acquisition poses a slew of dilemmas.  Receiving a loan at $25.5 billion which is a margin loan by using Tesla share price as collateral, as discussed here, this could end up being a risk for Musk if the Telsa price drops and upon news that he had gained approval of taking over Twitter, Tesla's shares dropped from $1008, closing at $997 (Chart 1).  Could Musk get caught up in a margin call if Tesla shares correct at 20%?  Absolutely.   Thus, he would have to start selling Tesla shares to payback the Twitter loan and this is where it could get very interesting.  As Hedge Funds that have been lurking to re-short Tesla will join in the capitulation of the electrical company share price.  If it drops.

And...

Chart 1, shows the main nemesis for Tesla, the 10 YR yield interest rate at 2.82%.  The U.S. Dollar now above $1.00 , which as a public listed company that relies on shares for financing Twitter and other acquisitions, in lieu of it being a net exporter of products will spell doom if borrowing costs go up.  Equally concerning for Telsa would also be:  1.  The Fed does hit a 1.00% interest rate, yes inflation for us poor consumers i.e food costs.  Export markets in the US will stay crimped (high U.S Dollar) i,e Tesla.  2.  China locks down the whole country via the spread of the XE and Omicron virus, sending supply chains into crunch mode, while lithium, Nickle, electrical batteries prices go through the roof  i.e Tesla

Chart 2, is the Margin Debt bubble at $853 Billion, throughout the pandemic a lot of companies borrowed to finance acquisitions and public share offerings etc.  So much for the socialist, big pharma in bed with the communist left wing anti-free speech brigade.  We are more capitalist than we have ever been. 

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