Maybe Elon Musk is richer than we think?

A total of $ 21 billion is missing from the total purchase price for the business of the century. Musk offered a personal guarantee for the subtotal, but no doubt he doesn’t have that amount of cash – as the New York Times raised the other day.

The 50-year-old businessman outlined that the social media company itself had provided him with $ 13 billion in bank financing. Tesla secured an additional $ 12.5 billion in a portion of its $ 170 billion stake. However, he did not provide details on how he would finance the remaining amount.

Twitter shares, on the other hand, fell somewhat after the announcement of the acquisition. At the beginning of the week, it closed at $ 51.70 instead of the previous 54.20, and the next morning it lost another 2 percent of its value and settled at $ 50.64.

The contract contains a stipulation that the buyer must pay a so-called termination fee if he withdraws from the purchase or if the agreement is terminated for any reason – reported and Bloomberg. Nothing to worry about yet. There is little doubt that Musk can generate the rest of the purchase price, after all, he is the richest man in the world.

The Bloomberg Billionaires Index estimates its wealth at $ 257 billion.

At the same time, barely a fraction of that amount is $ 3 billion in cash assets, in addition to which it still has some liquid assets. Or not?

In any case, there are other options.

Investor partners

One version is that you’ll find like-minded investors who agree with your ideas about Twitter and join him in making a purchase. In other words, part of the capital may come from new or existing shareholders.

He himself has already pointed out that this strategy is not ruled out. After his first offer to buy Twitter, Musk said at an event:

The intention is to retain as many shareholders as the law allows.

U.S. private companies are usually limited to less than two thousand shareholders. Accordingly, most small investors will be removed from Twitter owners once the acquisition is complete.

However, major shareholders, including Twitter founder Jack Dorsey, may choose to keep their shares in the company if they believe in Musk’s vision. Dorsey’s share alone is worth nearly $ 1 billion. Bloomberg News reported that Musk is looking for capitalist partners and is continuing talks with other potential co-investors.

At the same time, Musk’s statement that he is “not interested in economic results” could deter some potential investors.

Sale of own shares

Even if Musk won’t be able to know another big investor behind him, the crown jewels of his huge fortune are plenty enough to cut into the business alone.

After pledging part of Tesla’s shares for a $ 12.5 billion escrow loan, he still has plenty of unsecured shares in the automaker. These were valued at roughly $ 21.6 billion at Tesla’s closing price at the beginning of the week.

After tax, the sale of these shares is almost enough to cover the entire liability. Much depends, of course, on the price you get for the shares.

However, this strategy involves a number of risks.

The assumption alone that Musk will divest some of its shares has profoundly affected Tesla’s share price, which has lost 8 percent of its value since early April.

By the way, Musk also has shares in the private companies of SpaceX and The Boring Company, but the sale of these shares is unlikely because they are much less liquid.

It may be richer than we think

Nor is it ruled out that Musk is much richer than it is according to the Bloomberg index. He suggests that after the purchase of Twitter, he also allowed the acquisition of Coca Cola just to re-flavor it with cocaine. To his annoyance, he also announced that he would buy McDonald’s entire international chain and repair the ice cream machines.

Musk’s valuation is based on announcements for publicly traded shares, although information is limited. For example, if its investment portfolio performed better in the market, Musk could be even more affluent than Bloomberg estimated. In this case, it is possible that it will not need new sources of funding to cover the missing $ 21 billion.

Already last summer, it announced that it also owns a cryptocurrency – bitcoin, ethereum and dogecoin.

Although it is not known how much it holds or since, the exchange rates of the first two cryptocurrencies have risen about 720 and 2,600 percent, respectively, since March 2020.

This is a much steeper rally than the roughly 90 percent increase in the S&P 500 index. Dogecoin went up almost 30 percent just earlier this week after Musk announced the purchase of Twitter.

(Cover photo: Elon Musk, CEO of Tesla at the Tesla Gigafactory foundry in Grünheide on August 13, 2021. Photo: Patrick Pleul / Picture Alliance / Getty Images)

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