- Musk’s Twitter takeover is financed partially by a huge loan secured against his Tesla shares.
- He cut this loan in half with additional funding, but as Tesla shares fall, the deal looks shakier.
- If Tesla stock drops below $420, Musk won’t have enough to cover the loan, Bloomberg reported.
If Tesla shares continue to drop, Elon Musk might not have enough money to buy Twitter.
Musk’s takeover relies on a $12.5 billion loan secured against his Tesla shares. But plummeting tech stocks have imperiled this crucial part of the deal. Tesla has slumped more than 20% to $769 since the loan agreement was signed in April. If it falls below about $420, Musk wouldn’t have enough unpledged Tesla stock to cover the margin loan, Bloomberg calculated on Thursday.
This creates a foreboding though not unavoidable risk for Musk. He’s raising an additional $7.1 billion from Sequoia Capital, Qatar, Oracle founder Larry Ellison, and Saudi Prince Alwaleed bin Talal, whittling the margin loan down to $6.25 billion. Without that, Musk would already have run out of collateral when Tesla dropped below $837, which it did last Friday.
