Money Stuff: The Podcast

Episode: Visionary Kibbitzer: TSLA, X, KKR
Release Date: May 2, 2025
Hosts: Matt Levine (Bloomberg Opinion) and Katie Greifeld (Bloomberg News)

Introduction

In this episode of Money Stuff: The Podcast, Matt Levine and Katie Greifeld delve into the intricate dynamics surrounding Elon Musk’s role at Tesla, the financial ramifications of Musk’s acquisition of Twitter (now rebranded as X), and the evolving landscape of private credit markets with insights into recent collaborations between major financial firms like Capital Group and KKR.

Elon Musk and Tesla's Leadership Dynamics ([01:38] - [11:01])

Discussion Points:

• Elon Musk’s Impact on Tesla: Matt and Katie explore whether Tesla still needs Elon Musk as its CEO. They distinguish between Tesla as a car company and Tesla as a multi-billion dollar stock, noting that Musk's influence significantly affects the company's valuation.

• Board’s Consideration of New CEO: The Wall Street Journal reported that some board members questioned Musk’s focus, leading to speculative discussions about finding a new CEO. While Tesla denies actively searching for a replacement, the conversation highlights the tension between Musk’s diverse engagements and his commitment to Tesla.

• Musk’s Titles at Tesla: A humorous yet revealing discussion about Musk’s unconventional titles—“Techno King” and “Master of Coin”—reflects his desire to focus on technological innovations over traditional executive responsibilities.

Notable Quotes:

• Matt Levine ([02:25]): “Does Tesla, the multi-hundred billion dollar stock, benefit from having Elon Musk as CEO? I think the stock would go down if he wasn’t the CEO.”

• Katie Greifeld ([03:22]): “Tesla obviously is not a normal company. And this is a special situation.”

• Matt Levine ([04:19]): “The board would like him to spend more time with Tesla, and the shareholders would like him to spend more time with Tesla... So as a way to put pressure on him to spend more time with Tesla.”

The Twitter (X) Debt Saga and Private Credit Implications ([12:52] - [20:30])

Discussion Points:

• Elon Musk’s Acquisition of Twitter: The hosts recap Musk's leveraged buyout of Twitter in early 2023, initially viewed as a problematic deal due to the substantial $13 billion debt incurred to finance the purchase. Over time, Musk managed to sell the debt at near-par values, turning what was once seen as a dubious investment into a profitable venture for the underwriting banks.

• Impact on Private Credit Markets: Matt suggests that Musk’s maneuvering with Twitter’s debt may have inadvertently fueled the rise of private credit. As traditional banks grappled with large, non-performing loans from leveraged buyouts like Twitter, private credit firms stepped in to fill the lending gap, experiencing significant growth.

• Emotional Turmoil in Public Markets vs. Private Investments: The conversation contrasts the perceived emotional stability of private markets with the volatility of public markets. While private assets are often touted for their lower visible volatility, Matt argues that this is partly due to less frequent mark-to-market accounting, which can mask underlying fluctuations.

Notable Quotes:

• Matt Levine ([12:58]): “They’ve made an accounting profit on the deal, made an economic profit on the deal, and they also cozied up with Elon Musk and now probably get financing work for Xai, which is a giant company.”

• Katie Greifeld ([15:35]): “It’s like, did Elon Musk invent private credit? Not really, but kind of feels like perhaps he did.”

• Matt Levine ([16:48]): “One selling point of private assets is that they have lower volatility. And if you think about that for a second, it can't really be true.”

Capital Group and KKR’s Venture into Public-Private Debt Funds ([22:19] - [30:48])

Discussion Points:

• New Public-Private Debt Funds: Matt highlights a significant development where Capital Group and KKR have teamed up to launch mixed public-private debt funds. These funds blend traditional public bonds and loans with direct lending and other private credit elements, aiming to offer diversified investment opportunities to retail investors.

• Industry Trend Towards Retail Inclusion: The hosts discuss how major asset managers like State Street, Carlyle, Blackstone, Vanguard, and Wellington are increasingly collaborating to create investment products that bridge public and private markets. This trend is driven by the need to tap into the vast pool of retail investor capital, especially as traditional public market strategies face challenges like passive indexing and fee competition.

• Challenges and Concerns in Private Credit Funds: Addressing listener concerns about adverse selection—where private credit managers might allocate poorer-quality assets to retail funds—Matt and Katie discuss the safeguards in place, such as regulatory measures and internal governance within investment firms to ensure fair asset distribution.

Notable Quotes:

• Matt Levine ([22:25]): “So there's a story this week about Capital Group and KKR teaming up to launch mixed public-private debt funds... that's like the wave of the near future, I think.”

• Katie Greifeld ([26:15]): “What does that mean? It means you see like medium-sized companies, youngish medium-sized companies would go public and now like companies stay private longer and grow bigger in private markets.”

• Matt Levine ([27:28]): “There's a lot of capital in private markets. It's much less, it's much more convenient to be private than to like have to deal with earnings calls and SEC report and shareholder lawsuits...”

Concluding Insights and Future Outlook ([30:48] - End)

Discussion Points:

• Future of Investment Solutions: Matt offers a somewhat cynical view on the consolidation of investment solutions, suggesting that major firms like BlackRock and Vanguard may ultimately dominate the market by offering comprehensive, low-fee index funds that make active management less appealing.

• Self-Reinforcing Trends in Private Markets: Katie and Matt agree that the growth of private markets is a self-reinforcing cycle driven by both supply (investment firms seeking new avenues) and demand (retail investors eager to access high-growth private companies).

• Regulatory Vigilance: They touch upon the importance of regulatory oversight to prevent potential abuses in the new mixed public-private investment products, though Matt remains cautiously optimistic that existing measures will suffice for the foreseeable future.

Notable Quotes:

• Matt Levine ([24:37]): “The universal answer is private markets.”

• Katie Greifeld ([27:43]): “There is retail demand for this. It's not just like the issuers like it and the intermediaries, the retail customers...”

• Matt Levine ([26:14]): “It's all self-reinforcing. It's not like just one thing started it.”

Conclusion

In this episode, Matt Levine and Katie Greifeld provide a comprehensive analysis of Elon Musk’s pivotal role at Tesla and the financial intricacies of his ventures, particularly the leveraged buyout of Twitter. They further explore the transformative shifts in the private credit market, driven by both institutional actions and evolving retail investment products. The discussion underscores the interconnectedness of leadership dynamics, financial maneuvers, and market innovations, painting a vivid picture of the current and future state of the financial landscape.

Listeners interested in these topics can subscribe to Money Stuff: The Podcast and follow Matt Levine’s Money Stuff column on Bloomberg.com for more in-depth financial analyses and discussions.