Elon Musk Loses a Billion Dollars Every Time the Tesla Stock Drops by $2.43

[u/Healthy_Block3036]

https://www.ibtimes.co.uk/elon-musk-loses-billion-dollars-every-time-tesla-stock-drops-243-1732298

[u/Sixstringthings]

It has been reported that Elon used his Tesla equity heavily to finance his purchase of Twitter. If Tesla drops to a set level, it would trigger a call on his loans. This would explain his recent nervousness over the worldwide Tesla backlash and subsequent stock drop.

[u/BwianR → u/Sixstringthings]

I have literally no idea the exact legalities, but my impression was the sale of Twitter to xAI allows him to avoid the external obligations of his purchase of Twitter while changing nothing but words on paper

[u/Tahn-ru → u/[deleted]]

My (incomplete and probably wrong) understanding is that Twitter was only a portion of his debt - he apparently had pledged over half of his Tesla stock as collateral for loans even before he bought Twitter.

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. 

From this article - https://newrepublic.com/post/192687/elon-musk-panicking-tesla-stock-value

[u/Tahn-ru → u/Sixstringthings]

It's not just his purchase of Twitter. He has loans out for his access to cash in general. This article is a bit out of date (doesn't include the news where he sold Twitter to his xAI company) but the broader point remains - https://newrepublic.com/post/192687/elon-musk-panicking-tesla-stock-value

[u/Dr_Hexagon → u/Sixstringthings]

He just solved that by selling Twitter to xAI. Meaning he's not personally the guarentor of the loans anymore. They are now backed by xAI stock. So if the banks do a margin call they get paid in xAI stock not in Tesla stock.

Is this legal? Seems like it is unless someone takes him to court.