Elon Just Gave a Valuable Advice To A Tesla Investor on Margin Loans

Whole Mars Catalog Is a popular blogger and more than 325,000 people follow him for his tweets, which often go viral. 

Tesla CEO Elon Musk, who either saw Whole Mars Catalog's tweet or perhaps he follows him too, realized that tweets like these shouldn't go unnoticed, and decided to give him some advice. 

Musk, just about 40 minutes ago replied to Whole Mars Catalog, and wrote, "Please advise people to be wary of margin loans. Tesla has always been a high variability stock, often with no obvious rhyme or reason. We are confident about long-term value creation, but cannot control the manic-depressive nature of the stock market."

Please advise people to be wary of margin loans. Tesla has always been a high variability stock, often with no obvious rhyme or reason.

We are confident about long-term value creation, but cannot control the manic-depressive nature of the stock market.
— Elon Musk (@elonmusk) June 30, 2023

Whole Mars Catalogue replied back, and wrote, "Very true. When you are over-reliant on margin loans you could lose everything."

So what are these margin loans?

A margin loan is when you borrow money from a bank or a brokerage firm to buy more stocks than you can afford. You have to pay back the loan and the extra money called interest. It's risky because if the stock prices go down, you could lose money, but if they go up, you might make a profit.

Now you understand why Elon intervened and tweeted advice on margin loans to Whole Mars Catalogue. 

But now that Elon has spoken, some of the Tesla enthusiasts in the discussion, are concerned. One of them, with a tweeter handle @BetitallonTesla wrote, "This doesn't look good, Elon. It's concerning that this warning comes on the last day of the quarter and just two days before we receive Tesla's Q2 delivery numbers. Additionally, the margin percentage should have decreased significantly after the stock price doubled this year. This advice seems poorly timed unless you have knowledge suggesting a potentially significant decline in the stock price."

Others agree with Elon, that what he said is "totally true." One commenter, named Joseph Kim, wrote "totally true in the past (2022), and can be true moving forward. There is such a thing as being too bullish that you get slaughtered if you use margin. Millions were lost in 2022 over margin calls."

Today is the last day of the 2nd quarter of 2023. It started on April 1st and ends today June 30th with 91 days in it.

Disclaimer: I am not a Tesla stockholder and I am not in the stock market. This report is only for your information.

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.