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Insight Into How Elon Musk Funds His Business Ventures

Elon Musk does not follow the herd. Even though most executives do not use their private wealth to fund business ventures, Musk believes it is important to to show that he personally has skin in the game.

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More than almost any other entrepreneur, Elon Musk finances his three primary business ventures — Tesla Motors, SolarCity, and SpaceX — by leveraging his own personal assets. The Wall Street Journal (WSJ) says those three companies are valued at close to $50 billion, largely because of Musk’s “voracious appetite for risk and unyielding optimism.”

A study in February by ISS QuickScore found that just 13% of executives or directors at the 3,000 largest companies have pledged shares they own in those companies as collateral for personal loans.

Of the $105 million in bonds sold by SolarCity since October, 2014, SpaceX has purchased $90 million. Musk has taken out $475 million in personal loans at various times to help out one or another of his business interests when they needed cash injections. Those loans are secured by $2.5 billion worth of shares he owns in Tesla Motors and SolarCity, based on market values from this week.

WSJ says few top executives use their personal funds to support their business ventures because it can place them in conflict with other shareholders. It could also subject them to a margin call that could disrupt normal trading in company shares. “As an analyst, it is often a red flag for me when companies and management direct loans between entities they have personal or financial interests in,” says Nathan Weiss, founder and senior analyst at independent research firm Unit Economics LLC in East Greenwich, RI.

“There are a few cases where one company was doing considerably better than another and I borrowed money,” Musk  says via WSJ. “If I ask investors to put money in, then I feel morally I should put money in as well […] I should not ask people to eat from the fruit bowl if I have not myself been willing to eat from the fruit bowl.” In other words, he thinks it’s important for others to see that he has skin in the game.

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Musk says the odds of him not being able to handle a margin call are “almost zero.” That’s because his exposure is less than 5% of his total worth. He says he has “made it clear to shareholders that I subscribe to the notion that the captain is the last person off the ship.”

Venture capitalist Steve Jurvetson, a major early investor in all of Musk’s companies, says he is not concerned that Musk has pledged his own shares. As long as the total is less than 5% of Musk’s total net worth, “you don’t have much to talk about.” Jurvetson raves about Musk, saying “his passion is breathtaking.”

Republicans in Congress are less in awe of Elon, however. Now that SpaceX has signed contracts worth billions of dollars with NASA, they are proposing legislation that would prohibit Musk from using his stake in SpaceX as collateral for other loans, particularly to SolarCity. The solar power company has recently had a loud and contentious spat with the Nevada Public Utilities Commission, which voted to impose a monthly fee on all rooftop solar installations in the state.

In response, SolarCity has shuttered his operations in Nevada and laid off hundreds of employees. How that plays out as the Gigafactory comes online should be interesting, since the same utility company (owned by Warren Buffett) that imposed its will on the Nevada PUC will also be the energy supplier to that gigantic manufacturing process. Tesla intends to sell excess power back to the utility, a process that started the whole controversy in Nevada in the first place.

Representative Douglas Lamborn, Republican from Colorado, says the proposed legislation is intended to send a message to Musk that his moves are being watched and monitored. A SpaceX spokesman retorts that SpaceX’s “cash balances are not government money’.”

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Elon keeps his political leanings well out of public view. But it is clear his propensity for disrupting the established order has made a few enemies along the way.

Source: The Wall Street Journal
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Investor's Corner

Tesla Board member and Airbnb co-founder loads up on TSLA ahead of robotaxi launch

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member’s purchase.

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(Credit: Tesla)

Tesla Board member and Airbnb Co-Founder Joe Gebbia has loaded up on TSLA stock (NASDAQ:TSLA). The Board member’s purchase comes just over a month before Tesla is expected to launch an initial robotaxi service in Austin, Texas.

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member in a post on social media.

The TSLA Purchase

As could be seen in a Form 4 submitted to the United States Securities and Exchange Commission (SEC) on Monday, Gebbia purchased about $1.02 million worth of TSLA stock. This was comprised of 4,000 TSLA shares at an average price of $256.308 per share.

Interestingly enough, Gebbia’s purchase represents the first time an insider has purchased TSLA stock in about five years. CEO Elon Musk, in response to a post on social media platform X about the Tesla Board member’s TSLA purchase, gave a nod of appreciation for Gebbia. “Joe rocks,” Musk wrote in his post on X.

Gebbia has served on Tesla’s Board as an independent director since 2022, and he is also a known friend of Elon Musk. He even joined the Trump Administration’s Department of Government Efficiency (DOGE) to help the government optimize its processes.

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Just a Few Weeks Before Robotaxi

The timing of Gebbia’s TSLA stock purchase is quite interesting as the company is expected to launch a dedicated roboatxi service this June in Austin. A recent report from Insider, citing sources reportedly familiar with the matter, claimed that Tesla currently has 300 test operators driving robotaxis around Austin city streets. The publication’s sources also noted that Tesla has an internal deadline of June 1 for the robotaxi service’s rollout, but even a launch near the end of the month would be impressive.

During the Q1 2025 earnings call, Elon Musk explained that the robotaxi service that would be launched in June will feature autonomous rides in Model Y units. He also noted that the robotaxi service would see an expansion to other cities by the end of 2025. “The Teslas that will be fully autonomous in June in Austin are probably Model Ys. So, that is currently on track to be able to do paid rides fully autonomously in Austin in June and then to be in many other cities in the US by the end of this year,” Musk stated. 

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Tesla hints at ‘Model 2’ & next-gen EV designs

Tesla’s Q1 2025 update confirms new models this year, with production tied to existing factory lines. Could it be time for the Model 2 debut?

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(Credit: Tesla)

During its Q1 2025 earnings call, Tesla executives hinted at the much-rumored “Model 2” and other next-gen EV designs.

Tesla slightly addressed whether or not it will be pushing forward with the debut of new models later this year in its latest earnings call. The company’s product development executive, Lars Moravy, shared some details about Tesla’s design process and the upcoming affordable models.

“We’re still planning to release models this year. As with all launches, we’re working through, like, the last minute issues that pop up. We’re knocking them down one by one. At this point, I would say that the ramp might be a little slower than we had hoped initially…But there’s nothing that’s blocking us from starting production within the next, within the timeline laid out in the opening remarks.

“And I will say it’s important to emphasize that, as we’ve said all along, the full utilization of our factories is the primary goal for these new products. And so the flexibility of what we can do within the form factor and, you know, the design of it is really limited to what we can do on our existing lines rather than building new ones. But we’ve been targeting the low cost of ownership. Monthly payment is the biggest differentiator for our vehicles, and that’s why we’re focused on bringing these new models with the, you know, the lowest price, to the market, within the constraints I just highlighted.”

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In January, Tesla’s Chief Financial Officer Vaibhav Taneja teased several new product introductions for this year. There is at least one product that most Tesla supporters and investors are hoping to see: the company’s affordable vehicles, which have been dubbed by the EV community as the “Model 2” or “Model Q.”

Before Tesla’s Robotaxi event last year, many speculated that the company would also unveil its affordable next-gen vehicle. Gene Munster from Deepwater had expected Tesla to release a stripped-down version of the Model 3 as its affordable vehicle during the Robotaxi event. In the end, Tesla unveiled its Robotaxi vehicle and its Robovan design.

It’s been a while since the Robotaxi event, and Tesla has kept mum about its affordable vehicle. Considering its Q1 2025 performance, TSLA investors look forward to catalysts that could boost the stock.

The “Model 2” has been labeled a potential catalyst for Tesla. As such, TSLA investors and supporters have been itching for news about the new affordable vehicle. The main questions surrounding the “Model 2” revolve around its design and price. Based on Moravy’s statement, the “Model 2’s” design will heavily depend on Tesla’s current assembly lines and supply chain structures.

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Tesla regains Piper Sandler’s confidence with Robotaxi plans & Q1 Results

Piper Sandler says Tesla delivered the best-case scenario for bulls. $TSLA has catalysts ahead to silence the bears.

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tesla-model-y-delivery
(Credit: Tesla)

Tesla gained Piper Sandler analyst Alexander Potter’s confidence following its Q1 2025 earnings call. Piper Sandler reaffirmed its Overweight rating and $400 TSLA price target, signaling optimism for the company’s robotaxi and affordable vehicle launches expected this year. The firm’s stance reflects Tesla’s resilience amid market challenges.

Despite expectations of weak Q1 financials, Tesla’s stock edged up in after-hours trading, defying skepticism. Piper Sandler’s Alexander Potter noted that the results met the hopes of Tesla supporters, particularly as the company held firm on its timelines. Potter emphasized that anticipation for robotaxi details and new vehicle launches should keep critics at bay, supporting the $400 target.

“In our preview last week, we predicted that (at best) Q1 would be a non-event. With the stock trading up slightly in the after-hours session, it appears our best-case scenario has materialized. Considering generally weak Q1 financials, we think this is the best result that TSLA bulls could’ve reasonably hoped for.

“In our view, the most important Q1 takeaway is this: Tesla didn’t hedge expectations re: launching Robotaxis or lower-priced vehicles in 1H25. With <2 months until the end of June, investors can look forward to some interesting catalysts in the weeks ahead. In our view, this alone should be enough to keep the bears at bay, at least until we have a better idea re: the details of Tesla’s new products, as well as the scale/scope of the Robotaxi launch,” wrote Potter.

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Wedbush Securities’ Dan Ives, a longtime TSLA bull, echoed Potter’s optimism for Tesla. Ives raised his price target for Tesla stock from $315 to $350 with a BUY rating. His Tesla upgrade came after Elon Musk’s announcement during the Q1 earnings call that he would reduce his involvement with DOGE, signaling a sharper focus on Tesla.

Tesla’s steady Q1 performance and unwavering commitment to its 2025 roadmap, including the Robotaxi launch and lower-priced models, bolster investor confidence. Piper Sandler’s analysis underscores Tesla’s ability to navigate a competitive electric vehicle market while advancing its technological edge. The upcoming Robotaxi launch and affordable vehicle introductions are pivotal, with analysts expecting these initiatives to drive stock value through 2025.

As Tesla prepares for these milestones, its stock movement reflects market trust in Musk’s vision. With Piper Sandler and Wedbush reaffirming bullish outlooks, Tesla’s strategic moves will remain under close scrutiny, positioning the company to capitalize on its innovation pipeline in a dynamic industry landscape.

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