If you listen to the conventional wisdom, you'd
probably think Elon Musk is totally safe from
some big AI market crash. Yeah, the thinking
usually goes, well, Tesla sells actual cars,
right? Real revenue. So it can fund its own AI
stuff, like FSD, no problem. But that analysis
seems to miss the, well, the leverage, the sheer
amount of financial engineering going on. Exactly.
We've been digging into the source material for
this, and it paints a very different picture.
Less like a fortress, more like a... financial
house of cards. And it's all leaning on speculative
future value. Right. And if that speculation
vanishes. It's not just a market dip. No, it
becomes personal financial ruin. We are actually
talking about the possibility of a massive like
$94 billion margin call. Welcome to the Deep
Dive. Today, our mission is to cut through the
noise, look past the headlines, and really show
you how these financial connections make this
whole empire, well, uniquely vulnerable. Especially
to what looks like a coming collapse of the AI
bubble. So first, we need to be clear about the
kind of crisis we're discussing here. This isn't
like a minor correction. No, not at all. The
scenario our source lays out is basically a mashup
of the worst bits of the 2000 dot com crash and
the 2008 global debt crisis, a real perfect storm.
OK, so let's break that down. Part one is the
stock massacre, kind of like 2000, 2001. Yeah,
remember that. Even solid companies like Amazon
companies that obviously survived and thrived
later, they lost, what, 90 percent of their value?
Just evaporated. Because the speculative air
got sucked out of the room. And the thinking
is we'll see something similar, maybe even worse,
for companies riding high on this sort of AI
premium valuation. But the really scary part,
the 2008 echo, that's the debt, isn't it? Oh,
absolutely. We're apparently looking at over
$1 .2 trillion in bonds tied directly to AI company
debt. And the source says these are being rated
as super safe, like AAA rated. Which is kind
of wild when you think about it. These are companies
burning through cash. Many aren't profitable.
Yet their debt gets bundled up and sold as if
it's rock solid. It sounds exactly like the subcrime
mortgage crisis. Bad loans repackaged as safe
investments. It's the same structure. But what's
really staggering is the speed. Right. Didn't
it take like almost a decade in the 2000s to
build up around $1 .9 trillion in that bad mortgage
debt? Yeah, roughly. And the AI sector. They've
hit $1 .2 trillion in this, let's say, questionable
debt in just two years. Wow. That's terrifyingly
fast. So when these bonds inevitably default
in a crash scenario, boom, system -wide meltdown
potential. And the combined effect of the stock
crash and the debt crisis leads to what the source
calls the great capital freeze. Exactly. Financial
institutions get burned twice. They pull back
hard. All speculative investment just stops.
Globally. We're not just talking about VCs hitting
pause for a bit. No, no. We mean the actual flow
of money needed for big, expensive, long -term
R &D, the moonshot stuff. It just dries up. Well,
money only goes to safe bets. Guaranteed profits,
low risk. Which is basically a death sentence
for any project that needs huge amounts of cash
before it can prove itself. Speculative R &D
is dead on arrival. Okay, so if this crash...
Basically turns off the money tap for R &D. What's
the immediate impact on these newer cash hungry
projects? Well, new investment, R &D funding,
it just vanishes. Poof. Speculative projects
get wiped out almost instantly. Right. No more
runway. Let's take XAI as the first example.
The source kind of frames it as maybe a vanity
project. Born out of Musk's disagreements with
OpenAI. And like all these deep learning outfits,
it runs into that problem of diminishing returns.
Yeah, that's the core issue, isn't it? You can
spend 10 times the money training your model,
but you definitely don't get a 10 times smarter
AI. Nope. Costs shoot up exponentially, but the
performance gains get smaller and smaller. That
only works when money is basically free. So take
away the easy money. And the business model collapses.
Now look at XAI's funding. It's incredibly exposed,
hugely dependent on outside cash. Okay, what
are the numbers? Around $10 billion raised through
equity, another $12 billion through debt. Debt,
okay. And then maybe $2 billion transferred internally,
supposedly from SpaceX. But even with that, the
math is pretty stark. What's that, like 75 %
of its funding is external debt and equity? Exactly,
75%. From investors and lenders who are expecting
a massive return and probably pretty quickly.
So when the great capital freeze happens? That
external money disappears overnight. And the
debt, it gets called in. Uh -oh. Musk would somehow
need to find like four times the internal funding
just to keep the lights on at the current rate,
which seems... And isn't XAI also tied up financially
with X, the platform formerly known as Twitter?
Yeah. Which isn't exactly printing money either.
Right. That's another anchor. X likely goes down
with XAI, adding to the financial pressure personally.
Given that reliance, that 75 % external funding,
what really happens to XAI's core operations
when the plug gets pulled and the debt's called?
Investors want their money back. Or what's left
of it. Funding halts. That huge cash burn means...
Yeah, immediate bankruptcy. It just can't survive.
OK, so XAI seems incredibly vulnerable. And that
leads us straight to Tesla, the supposed bedrock.
The place everyone assumes is safe because, you
know, they make cars, people buy cars. But that
view totally misses the hidden vulnerability,
doesn't it? The valuation. That's the absolute
linchpin. Tesla's stock price. It's valued like
a high growth AI company, not a car company.
Because of the promises, right? Full self -driving,
robo -taxes, the future stuff. Precisely. That's
the AI premium baked into the price. So when
the AI bubble bursts, market panic sets in, and
that premium, it just gets stripped away. And
Tesla gets revalued. Not as a tech dream, but
as a car manufacturer. A very good one, maybe,
but still fundamentally an automotive company.
And we can actually put some numbers on that
potential revaluation, can't we? We can try.
Let's look at a solid, profitable automaker like
Toyota. Their price -to -earnings ratio, the
PEE, is around 8 .2, something like that. Okay,
a sane number. And Tesla's projected profit for
2025 is maybe $15 .2 billion, and that's already
down a bit. Right, so apply that sane PEE ratio,
$15 .2 billion times 8 .2. Comes out to $126
.64 billion. $126 .64 billion, which sounds like
a lot, but compared to its peak, It's less than
10%, a massive haircut. That revaluation alone
is damaging, but it's what it triggers that's
the real killer blow. Exactly. Musk's personal
leverage. The source estimates he's used over
half his Tesla shares. About 7 .8 % of the whole
company is collateral. Collateral for personal
loan. Yep. Estimated at around $94 billion. That's
the money likely used to fund things like the
X acquisition, maybe prop up XAI, keep SpaceX
R &D going. Okay, wait. This is the part. Honestly,
I still kind of struggle to wrap my head around
it. Using stock priced based on maybe someday
robo -taxes to guarantee $94 billion in loans
to fund other speculative ventures. The level
of interconnected risk there is just... Staggering.
It is. And that huge debt was secured against
Tesla's high AI premium valuation. So when Tesla's
value crashes down to that $126 billion number.
We hit what the source calls the margin call
apocalypse. Right. Let's pause there. That 7
.8 % of Tesla stock used as collateral, which
was backing the $94 billion loan. Suddenly, it's
only worth about $9 .88 billion. Precisely. The
lenders are instantly underwater by, what, over
$84 billion? Whoa. Just imagine the collateral
value tied to what was maybe a trillion dollar
company just evaporating almost overnight. Lenders
would panic. They'd issue immediate margin calls
demanding the full $94 billion back now. And
he can't sell his other shares to cover it, can
he? Because trying to sell that much stock would
just accelerate the crash itself. Exactly. It's
a catch 22. Selling triggers the very collapse
he needs to avoid. He's financially paralyzed.
So if he's paralyzed, can't sell, can't cover
the $94 billion debt. What's the final consequence
for Tesla, the company? He loses his shares.
The lender sees the collateral. He's forced to
liquidate whatever he can. He loses control,
loses his role as CEO. The company survives maybe,
but without him at the helm. Regardless of how
many Model 3s they're selling. Wow. Okay. Mid
-role sponsor, Reed Placeholder. All right. So
in this scenario, XAI is bankrupt. Musk has lost
control of Tesla. What about SpaceX? You know,
the one actually launching rockets, sending astronauts
up, deploying satellites. Surely that's safe
from an AI crash. You'd think so. But history
gives us a pretty stark warning here. After the
2000 crash, after 2008, what happened to moonshot
funding? It dried up completely. That kind of
speculative, long -term, high -risk R &D money
just vanished. And this combined crash scenario,
likely even worse for capital availability. And
that capital freeze becomes lethal for SpaceX
because of one thing, Starship. The big rocket.
The fully reusable one. Yeah. It's basically
a massive bet the company project. It needs a
constant huge fire hose of cash for R &D. It
hasn't delivered a fully working system yet.
The cost must be enormous already. Over $10 billion
spent apparently. And the source estimates the
total R &D needed to actually get it fully working
as promised. Probably over $20 billion. More.
Okay. $20 billion plus. Can the company fund
that itself? What are its profits like? Well,
the reported 2024 profit was only $147 million.
Wait, only $147 million? But what about all the
commercial launches, the government contracts,
NASA stuff? Is that factored in? It seems to
be, yeah. But that revenue, while significant,
just doesn't come close to covering the billions
needed every year for Starship's development.
It relies on external funding, billions in new
investment year after year. And post -crash.
In the great capital freeze, who's writing those
checks for a super expensive speculative rocket
program? Good question. Probably nobody. So if
Starship development grinds to a halt due to
lack of funding, then what? Then the Starlink
domino starts to fall. Ah, the satellite internet
service. Right. Starlink, as it stands, isn't
profitable. Its whole business plan depends on
Starship achieving that mythical super low launch
cost like $10 million a launch. Without cheap
Starship launches. The current rockets, Falcon
9 and Falcon Heavy, they're just too expensive
to deploy the thousands and thousands of Starlink
satellites needed to make the network viable
and profitable. The economics just don't work.
Okay, and here's the kicker, right? How much
of SpaceX's actual launch activity is Starlink?
In 2024. According to the source, 70%. Yeah.
70 % of all SpaceX launches were for their own
Starlink satellites. Wow. So if Starlink deployment
stops because Starship stalls? 70 % of SpaceX's
launch business disappears overnight. Leaving
them with just the remaining 30 % commercial
and government flights. Yeah. A much smaller,
likely stagnant market share. Yeah. And they'd
still have massive debts tied to Starship development
they couldn't repay. The valuation would plummet.
The financial crash brings down the rocket company
indirectly. Okay, just to clarify then, how much
of SpaceX's current operations really hinges
on Starship succeeding and delivering those low
costs? A huge chunk. That 70 % figure for Starlink
launches tells you pretty much everything. It's
fundamentally unsustainable without Starship
working as planned. Okay, let's quickly recap
the timeline then, the whole chain reaction,
because seeing the steps is key to understanding
this deep dive. Right, so phase one. The AI bubble
bursts. Stocks crash. AI -related debt defaults.
Speculative capital vanishes worldwide. The great
capital freeze begins. Phase two. XAI and the
X platform, starved of cash, go bankrupt pretty
much immediately. Musk's personal funds used
to prep them up are gone. Phase three. Tesla
gets revalued as just a car company. The stock
price crashes below the critical level for his
loans. That triggers the $94 billion margin call.
Musk is wiped out financially, loses control
of Tesla. And phase four, SpaceX can no longer
fund Starship development. The project halts.
Starlink deployment stops because it's too expensive
without Starship. 70 % of SpaceX's launch business
evaporates. The company likely faces bankruptcy
or massive restructuring. So wrapping this up,
the big idea here for you, the listener, is interconnectedness.
This isn't about isolated companies. No, it's
a financial house of cards. The failure of speculative
AI pricing doesn't just stay in the software
world. It triggers a massive personal debt crisis
for Musk due to that huge leverage against Tesla
stock. And that personal crisis then starves
the seemingly unrelated space company, SpaceX,
of the capital it needs to survive and fulfill
its long term plans. Right. The A .I. bubble
bursting exposes this massive systemic risk woven
throughout the entire empire, all built on that
foundation of speculative valuation and enormous
personal debt. It's quite a cascade. Indeed.
Thank you for joining us on this deep dive. We
explored some pretty complex and frankly startling
financial risk hidden within one of today's most
talked about business. Yeah, it really highlights
what can happen when ventures built on cheap,
easy money suddenly face the music, you know,
the reality of profit, debt and actual collateral
value. Before we go, we always like to leave
you with a final thought. Building on what we
discussed today, if this scenario or something
like it were to play out, what does it mean for
the global space industry if its largest private
player, SpaceX, collapses mainly because of a
financial tech bubble bursting, something completely
unrelated to rockets, ostensibly. It definitely
raises huge questions, doesn't it, about concentrating
so much critical infrastructure development in
one place subject to these kinds of market whims.
Maybe something to think about next time you're
looking up at the sky. We really encourage you
to maybe look into margin calls, how collateralized
loans work on this scale, that $94 billion figure.
That's really the core of this whole potential
vulnerability. Thanks for listening.