Elon Musk Buying Silicon Valley Bank

it's official Elon Musk has suggested

buying out Silicon Valley Bank yeah we

need to talk about this because I myself

have looked into starting a bank now

that's not like a spoiler alert I've

been doing that since about 2019 and

working with attorneys and and

Regulators on the idea of in the future

starting a bank right now I have no

intentions of starting a bank but I've

always learned and studied that the

easiest way to start a bank is to not

start a bank it is to buy a Bank

consider what Sofi did they bought a

bank and now so far has a banking

Charter banking Charters are extremely

difficult to come by not only do you

need a lot of cash I'm talking around

potentially up to 500 million dollars in

cash just to get a banking Charter and

then you're waiting two or three years

depending on where you want to get the

banking Charter Utah seems to be the

best place to go anyway very very

difficult and this is why one of the

easiest ways to actually get a banking

Charter is to acquire a bank

take a look at this little hint that we

got yesterday right here on screen now

you're going to see a tweet that says I

think Twitter should buy Silicon Valley

Bank and become a digital Bank

Elon Musk replies I'm open to the idea

now if you are a Tesla shareholder

that idea should make you nervous

because Twitter don't have money to do

this they are sinking in debt yes maybe

maybe they will go ebitda profitable in

the second quarter maybe they'll even

become actual cash profitable which is

different because depreciation is you

know a tax write-off right but maybe

they'll actually become cash profitable

like taxably profitable this year that's

the Hope Elon Musk seems optimistic

about that but advertising revenues are

still down to 40 of what they were last

year this is a massive decline in

advertising revenues and so it's better

than the 90 decline that it seemed like

we had right after he took over in

November uh in October but anyway

a banking license

and acquiring Silicon Valley Bank would

probably be very costly and

unfortunately Twitter doesn't have the

cash to do that so there is a risk that

Elon Musk would have to sell Tesla

shares

in order to buy this bank now what is

the actual residual value of this Bank

well that's the real question see I

replied oh no way look at that I have

420 likes that's like perfect timing 420

likes on my reply what an opportunity I

said two to three years to get a banking

Charter otherwise just make sure you go

through those toxic assets with a

fine-tooth comb so this is actually in

my opinion very critically important you

have to ask yourself if you're going to

buy Silicon Valley Bank how toxic are

the assets that are there that is very

scary because let's say let's say you

buy a bank I'm going to make this math

easy okay let's say you buy a bank

for uh oh I don't know uh a billion

dollars okay what's what's the market

cap of this sucker right now it's

probably much less you know then we can

actually work with that number so if I

look at svb stock

uh this thing's sitting at about 6.2

billion dollars right now okay well

let's say you were able to buy them just

to make math easy for five billion

dollars first of all that's a lot of

Tesla shares you'd have to sell right

but let's do some quick math so let's

say you want to buy this company for

five billion and it might end up being a

lot less because you might lose a lot of

the customers that's actually probably

your biggest risk factor uh in addition

to the assets so uh let's draw this out

and see what that looks like okay so if

you buy there we go okay pull this up

come on all right here we go so if you

buy a bank for five billion dollars so

you spent five billion dollars on it

your goal is to get assets

and IP

IP is pretty important but Silicon

Valley Bank might not have a lot of Ip

left now obviously Elon Musk has

priorities or reasons why potentially

buying a bank would be interesting he's

alluded to the idea of creating the X

app which would be known as the

everything app and the X app would

basically be a potentially this way

where you can deposit money transfer

money uh you know

receive interest on your money uh pull

margin loans credit lines whatever all

potentially built in either through the

X app or through Twitter you could send

payments through Twitter potentially you

could buy things on Twitter using the

cash you already have available in your

Twitter Bank app whether it's the X app

or the Twitter app these are all things

Elon Musk has suggested before it's not

a terrible idea it's sort of like trying

to compete with the PayPal which he's

helped which he helped co-found so he

has a little bit of experience in

banking but also uh you know you're

competing with the venmo the Zell the

FED now system the fed's coming out with

so you have a lot of these you have a

big set of competition but you also do

have a lot of users on Twitter so it's

an interesting idea

but anyway let's say you spent five

billion dollars acquiring a bank well

what if you're acquiring this bank for

five billion dollars and you go into the

deal thinking you're getting four

billion dollars of leftover assets and

maybe you're getting one billion dollars

of intellectual property honestly it's

probably the opposite right now you

probably only have one billion dollars

of actual assets uh and uh and four

billion dollars of Ip let's run with

that so well what happens if you spend

five billion dollars on this bank and

you then go through these assets and you

find out uh oh those five or that one

billion dollars of assets is actually

only worth point one billion dollars so

it's only worth one tenth of what you

thought it was worth well that's going

to be a little poopsie doopsy because

all of a sudden you've now lost another

900 million dollars in assets you

thought you had which potentially then

also means selling more Tesla stock

because it means you thought you had

more money than you really did so Elon

buying another business at this point is

the last thing that Tesla shareholders

want to hear about especially since Elon

Musk suggested and and almost nearly

promised that he was not going to sell

any more Tesla stock in 2023. Elon

starting to sell again would be a

complete cluster f for the stock this is

the worst time for Elon Musk to

potentially be selling again it would be

very bad uh but anyway on top of that

what is IP worth well IP

intellectual property is really the

brand of Silicon Valley Bank well I

think that brand is basically dead but

not only with IP do you actually get the

brand but you also get the customer base

which is a type of asset it's a little

different than intellectual property but

it's it's a customer base you could call

it that we'll we'll lump it under there

for this purpose so you get a customer

base but the problem with a customer

base is what motivation do customers

have to stay with you or come back to

you once they've left what if all the

customers leave to JPMorgan and some of

these other or other Regional Banks or

hopefully not hopefully larger Banks but

other Banks start saying hey you know

what we'll just give you the line of

credit you had at uh you know Silicon

Valley Bank and uh we'll help you with

some loose lending or whatever well then

potentially you don't need Silicon

Valley Bank and once lost left why would

you come back this is a risk for Elon

because if his idea is oh let's create a

bank so we can let people do margin

loans or get lines of credit or whatever

which would be the way that you would

actually retain your customer base by

giving them good lending options well

what do you run into if you start

lending people money well now you're

running into even more risk and even

more risk that you have to sell more

tassel stock because think about it not

only do you have a toxic Asset Risk

right but then you have the acquisition

costs of the business so this hurts

Tesla stock the first one hurts Tesla

stock the acquisition stock cost Hertz

Tesla stock but then if you potentially

have losses because of lending you're

doing as a bank well then that also

hurts Tesla stock so once again this

idea while it would be a wonderful

opportunity for him to get into a

banking Charter would be another massive

slap in the face to Tesla investors it

would be a horrible thing for Tesla

investors and I want to be very clear

about this anybody who suggests that

Elon musk's sales of Tesla stock didn't

actually really affect a Tesla stock is

out of their mind

absolutely out of their mind because

I'll give you some examples so last year

we know one sec last year we know that

uh

15 billion dollars of uh retail money

was injected into Tesla stock

but Elon sold 24 billion dollars and the

stock tanked to about a hundred dollars

per share much of that was created in my

opinion by the trend that Elon musk's

sales forced which made it an easy stock

to short and all of a sudden the darn

thing plummets right but not only that

what happens

well at the beginning of this year you

had about 13 billion dollars of net

retail inflows into Tesla stock and what

did that do to the stock it made the

stock go from a hundred-ish dollars to

where it sits now around 170 dollars

pretty large move so those net retail

buys are very very important so

think about that you have a potential

scenario where yes if Elon wants to

acquire a bank

during a banking crisis could

potentially be a phenomenal time to do

that but the more Elon is interested in

acquiring a bank the more pain you are

recreating

for Tesla stock I hate to say it but

elon's piggy bank for all of his

projects is Tesla stock so this is a

potential hell for Tesla stock

potentially really cool if Elon also had

a bank I mean it's cool and it sort of

goes towards The Narrative of him

wanting to create the X app and do what

he's been trying to achieve but uh yeah

grand scheme of things

very bad very potentially bad for Tesla

stock

uh let's see how do we make the bank

takeover work

well you need a lot of money you know

you need to you need to buy the toxic

assets for a discounted value and you

need to buy the IP of the company for a

um a discounted value so uh they those

are very very important uh yes in the

past he sort of suggested that as well a

test someone here says Tesla go to

seventy dollars uh Elon buys it Kevin

runs it I don't know that I could

honestly work for anyone else and and I

mean I appreciate you saying that I

don't think Elon would ever hire me but

um yeah I think it's very interesting we

need house hack to transfer everything

to Elon bang now you know what house you

know what the end game is is uh house

hack ends up creating its own bank in

the future not even for other people

just to do its own loans

end game

so uh the the plans that we let me just

be

so clear the plans that we have for

househag

are are plants that have just never

existed before and they're ones that I'm

so confident in that I'm I'm willing to

send myself into bankruptcy in poverty

in in doing everything that I can to

make sure that uh that that house hack

uh succeeds because I've such

uh such exciting Visions for it it's

very very exciting to me

all right now we have let's see here

it's funny you say has all house hack

money been moved out of small Banks so

you know what's actually really

remarkable about this

is uh about a month ago I got nervous

about small Banks we were banking with a

Community Bank and uh at the beginning

of February I said

I do not like financial institutions in

a recession let's move all of our money

that's not in treasuries to JP Morgan

and so for about a month now all of our

money at house hack uh most of our money

has been sitting uh well either in

treasuries but then from like just cash

point of view uh somewhere around 95 of

it has already been sitting at JPM so

the money's already at JPMorgan like I

had I don't know if it was just like

like the world sent this like energy

beam to me I don't really believe in

that stuff okay I think that sometimes

that sounds a little loony I'm just

saying like I don't know if that

happened and something's like get your

money out of those small Banks a month

ago and I already made that move

or it was just sort of like

rationalizing like I don't like banks in

a recession let me make sure all of our

house hack money is protected as much as

possible and then we ended up moving to

JP Morgan so we actually already did

that a month ago because there was so

much of that banking risk uh and and we

didn't even think about Silicon Valley

Bank or even silvergate at that point uh

and we also we had another about 290

thousand dollars left over at the

community bank that's because we got

some uh some additional wires that came

in and so I've already uh initiated that

wire and uh that's uh that either

already showed up or it's showing up uh

Monday morning so but the wire's already

been processed so we we basically have

negligible exposure to to a smaller

Regional Banks so in other words I am

putting my money where my mouth is and

I've actually already been doing that

um conveniently knock on wood that we

kind of are able to have that kind of

foresight in the future as well but that

foresight ended up being very very

convenient I think not that any means we

were at risk and have any exposure to

Silicon Valley Bank we don't but I think

it's very interesting and and I don't

know that I would trust uh you know Elon

taking over the bank

because if elon's bank had problems and

you're like oh well Elon will bail me

out uh that just means him selling even

more Tesla stock

it's uh it's uh honestly

it's it sounds terrible to say but like

these times as scary as they are and as

painful as they are

because everybody's getting hurt if

you're involved in stocks you know bonds

if you're dealing with the bank

everybody gets hurt right it's kind of

exciting though because it's like whoa

like there's a lot of stuff happening

like this is we're gonna remember this

for the rest of our lives these these

sorts of things it's pretty remarkable