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.