ANN/THE STAR – Billionaire Elon Musk is warning against margin debt, citing the risks of “mass panic” in the stock market as a possible recession looms.
“I would really advise people not to have margin debt in a volatile stock market and, you know, from a cash standpoint, keep powder dry,” Musk said in the All-In podcast released last Friday.
“You can get some pretty extreme things happening in a down market.”
The Tesla Inc chief executive officer put up billions of his own money when he purchased Twitter Inc for USD44 billion earlier this year and saddled the company with USD13 billion of debt.
Bloomberg News reported that Musk’s bankers are considering replacing some of the high interest debt he layered on Twitter with new margin loans backed by Tesla stock that he’d be personally responsible for repaying.
He’s also disposed of nearly USD40 billion of Tesla’s shares, a move that contributed to driving the stock to a two-year low. Following the latest sales, Musk again said he would stop selling shares, adding that the pause could last for two years or so.
During the podcast, Musk also reiterated his belief that the economy is overdue for a recession and that the slowdown could be similar to the scale seen in 2009.