Musk’s $8.5 Billion Tesla Stock Sales Make Math Behind Twitter Deal More Tricky

image

(Bloomberg) — Elon Musk’s sale of more than $8.5 billion of Tesla Inc. shares has made the math behind his $44 billion deal to buy Twitter Inc. a bit more tricky.

To acquire the social-media company, Musk has lined up $13 billion in bank financing, $12.5 billion in margin loans backed by Tesla shares and committed a further $21 billion himself.

Before his most recent share sales, the Tesla co-founder had about $3 billion in cash and investments to cover that $21 billion commitment, according to Bloomberg calculations. The recent disposals bring that total to about $11.5 billion.

But as a result of the trades, Musk has fewer shares to cover his margin loan, which has an initial loan-to-value ratio of 20%. That means he’ll need to post Tesla shares worth $62.5 billion when it’s funded.

He now has 163 million shares remaining worth about $146 billion, though more than half are already pledged to secure existing personal debt, according to Tesla’s most recent proxy statement. If the electric carmaker’s share price drops under $837 — or about 7% below where it is currently — he won’t own enough stock to secure the loan. The shares traded as low as $821.70 as recently as Thursday.

The calculations assume he can’t post shares related to Tesla options because the collateral needs to be “free of any lock-up or selling restrictions,” according to a filing. The options he owns convert to shares that can’t be sold for five years.

Musk has said that he’s trying to convince new or or existing equity investors to join him in the Twitter deal. If successful, that reduces the amount he needs to contribute.

Musk said in a tweet Thursday that he has “no further Tesla sales planned after today.” But he still has time to submit more regulatory filings if additional sales took place that day.

©2022 Bloomberg L.P.

Trending Ideas

Featured Stocks On The Move

Daily Rundown

Top 3 Stocks in Leading Sectors
  • 3 Energy Storage Stocks To Buy Now

    Bloom Energy Corporation (BE) Bloom Energy Corporation designs and manufactures solid oxide fuel cells for on-site power generation. Their Energy Servers provide reliable, resilient, and sustainable energy solutions for various... Read More

  • 3 Steel Product Stocks To Buy Now

    Perma-Pipe International Holdings, Inc. (PPIH) Perma-Pipe International Holdings, Inc. specializes in engineered piping solutions for various industries, including oil and gas, district heating and cooling, and industrial applications. The company... Read More

  • 3 Oil Field Machinery Stocks To Buy Now

    Matrix Service Company (MTRX) Matrix Service Company provides engineering, fabrication, construction, and maintenance services to energy and industrial markets. The company operates through segments such as Storage and Terminal Solutions,... Read More

  • 3 Restaurant Stocks To Buy Now

    Brinker International, Inc. (EAT) Brinker International, Inc. is a leading casual dining restaurant company, operating well-known brands such as Chili’s Grill & Bar and Maggiano’s Little Italy. The company focuses... Read More

  • 3 Coal Stocks To Buy Now

    Natural Resource Partners L.P. (NRP) Natural Resource Partners L.P. is a master limited partnership that owns, manages, and leases a diversified portfolio of mineral properties in the United States. The... Read More

  • 3 Real Estate Developer Stocks To Buy Now

    IRSA Inversiones y Representaciones Sociedad Anónima (IRS) IRSA Inversiones y Representaciones Sociedad Anónima is a leading real estate company in Argentina, engaged in the acquisition, development, and management of diversified... Read More

  • 3 Gas Distribution Stocks To Buy Now

    New Jersey Resources Corporation (NJR) New Jersey Resources Corporation is an energy services holding company that provides regulated natural gas distribution services through its subsidiary, New Jersey Natural Gas. The... Read More

  • 3 Food Product Stocks To Buy Now

    The Chefs’ Warehouse, Inc. (CHEF) The Chefs’ Warehouse, Inc. is a premier distributor of specialty food products, serving high-end restaurants, hotels, and gourmet food stores across the United States and... Read More

  • 3 HVAC Stocks To Buy Now

    Featured Content Lennox International Inc. (LII) Lennox International Inc. is a global leader in energy-efficient climate control solutions, specializing in heating, ventilation, air conditioning, and refrigeration (HVACR) products. The company... Read More

  • 3 Hotel Stocks To Buy Now

    Featured Content Hyatt Hotels Corporation (H) Hyatt Hotels Corporation operates a global portfolio of luxury, full-service, and lifestyle hotels, as well as vacation properties. Known for its premium hospitality offerings,... Read More

  • 3 Tobacco Stocks To Buy Now

    Featured Content Turning Point Brands, Inc. (TPB) Turning Point Brands, Inc. is a consumer products company that manufactures and markets tobacco products and alternative smoking accessories. The company’s portfolio includes... Read More

  • 3 Life Insurance Stocks To Buy Now

    Featured Content F&G Annuities & Life, Inc. (FG) F&G Annuities & Life, Inc. specializes in annuities and life insurance products designed to meet the long-term financial planning needs of clients.... Read More