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Trump took a shot at being a shady car salesman Tuesday during a press event for Tesla at the White House. The president posed for photos behind the wheel of a Tesla he apparently can’t drive with a grinning Musk, remarked with astonishment that “everything’s computer” in the futuristic vehicles, and even read from what appeared to be a sales pitch sheet listing prices for different Tesla models.
Trump’s desperate show of fealty toward the bouncing billionaire came after Tesla stock plummeted 15 percent Monday, drying up the very last drops of Musk’s postelection gains and costing him a whopping $29 billion.
But it seems Trump’s rather unpresidential measures to boost Tesla’s floundering stock could serve a greater purpose: keeping the not-so liquid Musk from defaulting on his loans.
The Washington Post reported in April 2022 that Musk had already used more than half of his more than 170 million Tesla shares as collateral to acquire loans, and planned to do so again to borrow more money to buy Twitter, now X.
Musk acquired X for $44 billion in October 2022, borrowing roughly $13 billion from several banks, including Morgan Stanley, Barclays, and Bank of America. Musk’s loans had been “hung” on those banks’ balance sheets for nearly two years, longer than some unsold deals from the 2008 financial crisis.
Reuters reported last month that interest in acquiring Musk’s debt increased after Trump secured the White House and Musk emerged as his number two. At the time, only $1.3 billion remained on the banks’ sheets.
In a 2024 SEC filing, Musk was listed as holding a whopping 238,441,261 shares of Tesla stock that were “pledged as collateral to secure certain personal indebtedness.” At the time, he held 715,022,706 shares in total, according to the filing, meaning that roughly one third of Musk’s shares were serving as collateral for his loans.
It’s unclear exactly how much of Musk’s shares are held in collateral now. Musk currently owns 410 million shares of Tesla stock, a roughly 12.8 percent stake in the company, according to Investopedia. The value of those shares, including those held as collateral, appears to be dropping every day he plays pretend as the unelected bureaucrat leading the Department of Government Efficiency.
Here’s where Musk’s problem emerges: If the stock price goes low enough, the banks Musk borrowed from could force him to sell his shares.
Tesla warned that this could happen in its annual filing in 2022, according to The Washington Post. That, in turn, could make things even more dire for the car company.
“If Elon Musk were forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such sales could cause our stock price to decline,” Tesla wrote.
“We are not a party to these loans,” the company added.
It already seemed like Musk was going to have trouble paying back his loans for X. Last year, the social media company reported that its value had plummeted by more than half, to around $19 billion. When the banks formulated a plan to restructure the loan, X didn’t follow through, The Wall Street Journal reported at the time.
Tesla stock was doing slightly better on Wednesday, as a result of an uptick in the wider market caused by a report that inflation had eased slightly in February.
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I think this article could be a little bit more precise with its reporting.
The Washington Post reported in April 2022 that Musk had already used more than half of his more than 170 million Tesla shares as collateral to acquire loans, and planned to do so again to borrow more money to buy Twitter, now X.
This was before a 3:1 stock split, so would represent 510 million shares today. Back then, those shares were worth $62 billion. Today, it’s more than doubled. So even if he’s done nothing with his debt or his shares, all the gains of the past few years would serve to give him a lot more cushion, to where he’d be safe even if the stock price plummets further, to around half of what it is today. More likely, though, he’s used some of the money from selling some of the shares to pay down his debt.
Musk acquired X for $44 billion in October 2022, borrowing roughly $13 billion from several banks
Unfortunately, that $13 billion was borrowed by Twitter itself, not by Musk. If the corporation defaults on the loans, the banks can force the sale of Twitter’s assets and wipe out the value of the shares (destroying the value of Musk’s investment). But that’s not debt that could be called and somehow jump over to Tesla share prices.
So it is true that a tanking Tesla stock price can cascade into a bankruptcy for him. But it needs to fall a lot more than where it’s fallen today. Probably needs to lose another half of its value, at a minimum, maybe more, before it actually triggers a cascading failure.
Remember, don’t buy Apple products. They went back to advertising on X.
That’s not the main reason to not buy apple products lol
Now that would be fun. If the banks forced him to sell stock for a hundred billion dollar or more, he would have to finally pay all the taxes he avoided in all those years, too. Good.
well, no, he wouldn’t have to pay taxes, because he’s special, and any IRS agent who put their name on the ‘please pay us’ would be personally fired and then someone would have them disappeared.
but it is a nice idea.
Trump’s about the sign an executive order saying not purchasing a Tesla is domestic terrorism.
Love to start my day with some amusing, uplifting news.
Burn baby, burn!
That fascist f**k should have stayed the hell out of politics
it had more money than god, and decided to play high risk games. it will burn.
I might not be alive to see it, because, you know, the camps and the death squads, but it will.
yall are crazy if you think the banks are going to challenge musk now. if this happens, they’ll be happy to renegotiate the terms or whatever they need to do to keep their techbro happy
that actually depends. it’s far less likely than a shitlib who thinks rules are magic spells might assume, but there is a case to be made:
there’s quite a lot of capital outside the country which is not happy about all this instability nonsense, and a lot of the finance industry is seriously upset by even the THOUGHT of reneging on US treasury bonds, for which they hold this administration responsible, among many many many lesser sins that they thought were just empty campaign promises. taking apart this bastards corpse so fast the water doesn’t even turn pink might be just the example the finance ghouls think they need to make to secure the bag.
Id love to have any glimmer of hope, but after the last 8+ years, I’ve got none left. It’s just time and again and again and again the oligarchs and those in power just never seem to be held accountable - by the law, by contracts, by banks, by corporations, no-one. Everyone is bending the knee, paying off huge settlement ‘bribes’ etc.
I have no hope there is anyone in this world capable, let alone willing, to stand up at this point.
Banks only care about money
Musk makes them money right now. If he starts losing them money, they’ll come asking, especially if they know he’s on his way down for good, like a run on the bank it’ll be the early birds getting the worm
if you owe the bank $10,000, you have a problem. If you owe the bank $250,000,000,000, the bank has a problem. He’s also financed by saudi and likely russia - no one will be coming for him or his money.
Fiduciary responsibility. Bankers could become personally liable. Their investors would be quick to sue.
Fuck elom.
