No. of Recommendations: 11
I stumbled across this story in the new Newsweek. Just thought I’d throw a little more gas on the already brightly burning Tesla fire:
According to a 2024 Tesla filing with the Securities and Exchange Commission (SEC), Musk has pledged 238.4 million shares "as collateral to secure certain personal indebtedness." At the time, Musk held a total of 715.0 million shares, meaning approximately one-third were being used as collateral for personal loans.
Musk currently owns around 411 million shares in Tesla, according to portfolio management service Whalewisdom, equating to a roughly 12.8 percent stake in the company.
It is currently unclear how many of Musk's shares are currently collateralized, the loan-to-value ratio agreed by lenders, and how far Tesla stock would need to fall for him to face a margin call.
According to certain reports, Tesla's stock would have to decline to $114 for Musk to face margin calls on these loans, equating to a 50 percent drop from its current price and below the minimum price targets currently set by analysts.
What People Are Saying
Attorney and legal commentator Tristan Snell, via X: "Elon Musk's purchase of Twitter was financed by borrowing money. He used his Tesla stock as collateral. If Tesla stock keeps crashing, the banks/creditors could repossess Twitter."
Tesla, in its 2022 annual SEC filing, said: "If Elon Musk were forced to sell shares of our common stock, either that he has pledged to secure certain personal loan obligations, or in satisfaction of other obligations, such sales could cause our stock price to decline."
The company added: "We are not a party to these loans, which are partially secured by pledges of a portion of the Tesla common stock currently owned by Mr. Musk. If the price of our common stock were to decline substantially, Mr. Musk may be forced by one or more of the banking institutions to sell shares of Tesla common stock to satisfy his loan obligations if he could not do so through other means. Any such sales could cause the price of our common stock to decline further."
