The banks are still loaning him money for sure, but at a certain point that’s not exactly a good thing for musk. The stock price is what the banks are using as collateral, and with these types of loans the banks have the ability to collect on the loans if the stock devalues past a certain point.
Musk is only the richest man in the world on paper, and that’s because Tesla stock is overpriced by several orders of magnitude. If Tesla stock receives a reasonable correction, there’s a very good chance that it’s going to have a cascading effect on his other forms of collateral.
He and other “billionaires” are a lot like people juggling too many loans using their homes as collateral. And like them if the housing market (economy) collapses they are going to be in really poor positions. It’s really just gambling and betting numbers always goes up, just so you don’t ever have to pay taxes.
The banks are still loaning him money for sure, but at a certain point that’s not exactly a good thing for musk. The stock price is what the banks are using as collateral, and with these types of loans the banks have the ability to collect on the loans if the stock devalues past a certain point.
Musk is only the richest man in the world on paper, and that’s because Tesla stock is overpriced by several orders of magnitude. If Tesla stock receives a reasonable correction, there’s a very good chance that it’s going to have a cascading effect on his other forms of collateral.
He and other “billionaires” are a lot like people juggling too many loans using their homes as collateral. And like them if the housing market (economy) collapses they are going to be in really poor positions. It’s really just gambling and betting numbers always goes up, just so you don’t ever have to pay taxes.