Investor's Corner

Elon Musk eliminates margin loan from Twitter deal funding, Tesla stock responds

Credit: Tesla

As CEO Elon Musk showed in a filing with the SEC yesterday that he had pledged an additional $6.25 billion toward his $44 billion acquisition of Twitter, simultaneously the Tesla frontman’s margin loans against his holdings in the electric automaker reduced. The move offloaded pressure that was once on Tesla stock, sending the automaker’s shares soaring over 6 percent.

A filing yesterday showed Musk increased his commitment to $33.5 billion, moving closer to a buyout of Twitter. Musk, who has also funding commitments of up to $7 billion, including a $1 billion pledge from Larry Ellison, relieved plenty of Tesla investors with the reduced margin loan.

Musk had initially taken a $12.5 billion margin loan, but reduced it by 50 percent earlier this month after Ellison and others made their commitments.

The deal has been complicated at times, especially after Twitter agreed to sell the platform to Musk for $54.20 per share on April 25. Musk has been hot and cold with the potential acquisition, first adamant on making the purchase to protect the “inclusive arena for free speech.” As Twitter stock cooled off from its highs during the Musk-Twitter saga, the Tesla CEO backtracked on the deal, looking for a lower price.

Twitter deal price might drop as Tesla’s Elon Musk “knows he’s overpaying:” Jefferies

Twitter’s report that stated less than 5 percent of its user population consisted of bots made Musk announce the deal was on hold. Looking for a potential discount equivalent to Twitter’s bot concentration, Musk made another move toward locking in the $44 billion purchase, only avoidable with a $1 billion termination fee.

Amongst potential shareholders that could add to Musk’s financing commitments are Twitter founder and former CEO Jack Dorsey, who believes the Tesla CEO may be the best person for the job. Dorsey will not be rejoining the Twitter board after the company’s shareholder meeting held yesterday.

Tesla stock has been hammered since the deal was announced in late April. Shares are down over 20 percent in the past month, with the company’s valuation spiraling well below its once trillion-dollar levels. Musk has taken a personal hit too as his net worth has decreased to under $200 billion. Thursday saw Tesla’s best morning in recent memory, with shares up over 6 percent at 11:49 am in New York. Tesla shares were trading at $700.37 at the time of publishing.

Disclosure: Joey Klender is a TSLA Shareholder.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Elon Musk eliminates margin loan from Twitter deal funding, Tesla stock responds
-->
To Top