It's even worse than it appears..
Friday May 20, 2022; 2:49 PM EDT
  • Why is Musk trying to pull out of the Twitter deal?#
  • I don't think it has much to do with how many bots are using Twitter, or whether Democrats are assholes, or even that Musk did or didn't show his dick to a stewardess. I think what really matters is what's happening to Tesla stock, and with it, Musk's wealth.#
  • Here are some facts.#
    • Musk sent his acquisition offer to Twitter on April 13. #
    • On that day Tesla stock was trading at $1022.37 per share.#
    • Today Tesla is selling for $645. That's about a 37% drop. #
  • I don't know for sure, but I'd guess that Musk and his partners are all borrowing to buy Twitter. They certainly don't want to sell stock to raise the money to buy Twitter because that would be a taxable event. And if you take out a loan with your stock as collateral, you don't have to sell the stock, so -- no taxes. It's how rich people buy things. Even not-so-rich people do it. A moderately wealthy person who could afford to pay cash for a house, probably would just take out a loan, to avoid paying taxes. #
  • But the huge drop in Tesla stock, and whatever stocks Larry Ellison is borrowing against to raise the money for his part of the deal, means that the bankers who are lending against that stock as collateral will want more stock. No problem you say, they all have lots of stock. But maybe he's already used that stock as collateral on other loans? Who knows how much of a stretch this is for Musk. He might not have enough stock to do the deal now. But he signed the deal, so.. #
  • $TSLA before and after April 13.#
  • Musk and his partners are squeezed in a hard-to-have-foreseen way. The deal has become more expensive and harder to do. And maybe the market "correction" isn't done yet. Maybe Tesla will be worth half what it was, or less?#
  • BTW, if you want to get an idea of what this is like, season one of Succession has the young Kendall Roy in a similar bind. 😄#
  • Unless the market and $TSLA recover quickly this downturn is hitting Musk a lot harder than it would have if he had not done the Twitter deal. But he did, so he's kind of fucked, or so it seems. #

Last update: Friday May 20, 2022; 8:47 PM EDT.

You know those obnoxious sites that pop up dialogs when they think you're about to leave, asking you to subscribe to their email newsletter? Well that won't do for Scripting News readers who are a discerning lot, very loyal, but that wouldn't last long if I did rude stuff like that. So here I am at the bottom of the page quietly encouraging you to sign up for the nightly email. It's got everything from the previous day on Scripting, plus the contents of the linkblog and who knows what else we'll get in there. People really love it. I wish I had done it sooner. And every email has an unsub link so if you want to get out, you can, easily -- no questions asked, and no follow-ups. Go ahead and do it, you won't be sorry! :-)