‘Not to have…’: Elon Musk’s advice for investors during volatile market

In the All-In podcast, the billionaire said, “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”. “You can get some pretty extreme things happening in a down market,” he added.

Musk put up billions of his own money when he purchased Twitter Inc for $44 billion earlier this year and saddled the company with $13 billion of debt.

According to Bloomberg News agency, Musk’s bankers are considering replacing some of the high-interest debt he layered on Twitter with new margin loans backed by Tesla Inc’s stock that he’d be personally responsible for re-paying.

He’s also disposed of nearly $40 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 this week he will stop selling shares, adding that the pause could last for two years or so.

“I’m not selling any stock for 18 to 24 months,” Musk said during an audio-only Twitter Spaces group conversation on Thursday. Musk then said he wouldn’t sell Tesla shares for two years, but backtracked and said he would pause sales for at least one year.

Musk dumped another $2.58 billion worth of Tesla stock last week and has sold nearly $23 billion worth of his car company’s shares since April when he started building a position in Twitter.

As of December 2020, Musk had 92 million Tesla shares pledged as collateral, according to an SEC filing in April 2022.

Tesla’s market value was over $1.1 trillion on April 1, the last trading day before Musk disclosed he was buying up Twitter shares. The company has since lost nearly two-thirds of its value, at a time when rival automakers are cutting in on Tesla’s dominant share of electric vehicle sales.

Tesla shares fell more than 1% on Friday, to $123.74. They were more than $360 each on April 1 and hit an all-time high of more than $414 in November of 2021.

This week, Tesla boosted the discounts it’s offering through year’s end on its two top-selling models, an indication that demand is slowing for its electric vehicles.

The Austin, Texas, company began offering a $3,750 incentive on its Model 3 sedan and Model Y SUV on its website earlier this month, but on Wednesday doubled the discount to $7,500 for those who take delivery between now and 31 December.

Further, Musk reiterated his belief that the economy is overdue for a recession and that the slowdown could be similar to the scale seen in 2009.

“My best guess is that we have stormy times for a year to a year and a half, and then, dawn breaks roughly in Q2 2024, that’s my best guess,” Musk said. “Booms don’t last forever, but neither do recessions”.