Ask HN: How does Elon Musk have $43B of liquid cash?

https://news.ycombinator.com/item?id=31048324

by nyjah • 4 years ago

1 9 4 years ago

news.ycombinator.com

Does anyone have a better understanding of this? Is it from pumping and dumping crypto? I understand he is super duper rich, but I don't understand / have a hard time comprehending a number as large as $43B.

minimaxir• 4 years ago

He does not have $43B liquid, which is why there are a lot of questions on how he would actually execute a hostile takeover.

trixie_• 4 years ago

You have a bank agree to underwrite it because you have the collateral and when the purchase is made then figure out all the details. A large chunk of it will no doubt be re-sold to private investors.

nyjah3• 4 years ago

Wow, thats wild, I hadn't even thought that he would then take that and sell it to private investors. Presumably at a higher price and make the money right back? Thanks for responding and great input!

WheelsAtLarge3• 4 years ago

He may not but he can use his tesla stock plus however much he can borrow against his twitter equity assuming he gets control of twitter. Similar to the way people buy homes, you only need a down payment and the bank lends you the rest.

But from the point of view of the twitter stockholders they get 100% cash from musk for their shares.

It seems he might not have the financing in place so twitter have doubts about the offer. In theory, he can sell his tesla stock and have the money at hand. It's very unlikely for him to do that.

nyjah3• 4 years ago

Thanks for the input. I really appreciate the answer. One question. Can he borrow against the twitter equity he just bought previous to this offer or he can borrow against future twitter equity he is acquiring with this offer?

WheelsAtLarge3• 4 years ago

In theory he can borrow against any and all equity he has control over but only the lending banks decide what they are willing to lend on. They will want to know exactly what he wants to do with the company and how he will repay the loan before they agree on anything. On the one hand the banks love the idea of lending the money since they will get a truck load of money in service fees and interest. On the other hand banks don't like high risk so they will only lend if they know that they can get their money back.

So the answer is, only the banks know exactly what equity they will use for the loan. All these mega loans are unique.

BTW, it's unlikely that any one bank will make the complete loan. They will gather a bunch of other banks and investment firms to come up with the money. Eventually the loan will be turned in to bonds that will be sold as investments for companies with lots of cash such as insurance companies and retirement funds. The short term profits are in the service fees that will be generated by the takeover activity.

anamax• 4 years ago

If Musk has competent financial planners, he has assets with various amounts of liquidity, including pre-arranged lines of credit.

It would probably take him a while to get more than his supposed net-worth. However, getting $10-15B might be < 24 hours.

Ask HN: How does Elon Musk have $43B of liquid cash?

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