WSJ: Elon Musk’s Financial Empire Is in Trouble

In a recent article, the Wall Street Journal reports that Tesla CEO and Twitter owner Elon Musk’s immense wealth and borrowing power are being tested as Tesla shares continue a rapid decline while he attempts to stabilize his $44 billion investment in Twitter.

The Wall Street Journal reports that Elon Musk is facing financial pressure as Tesla stocks continue a downward trajectory and his $44 billion investment in Twitter has yet to pay off. The WSJ states that Musk’s ability to use his Tesla shares to raise money by selling or borrowing against them is being complicated by their rapid loss in value in recent months.

The WSJ notes that Musk has largely been a cash-poor billionaire for most of his career, depending upon margin loans — borrowing backed by his Tesla shares — for personal expenses and business investments while retaining his shares. But as Tesla’s market value has fallen by approximately $700 billion this year, Musk’s personal wealth has declined.

Tesla shares have fallen by around 65 percent in 2022 and Tesla investors have grown concerned by Musk’s focus on Twitter following his takeover of the company in October.

The WSJ writes:

Late last year, just as Tesla’s stock price peaked, he began selling Tesla shares, totaling more than $39 billion including $3.5 billion last week. It’s unclear what his liquidity is like after what he said would be a more than $11 billion tax bill for 2021 and putting up roughly $25 billion in cash as part of buying Twitter.

Mr. Musk’s current Tesla holdings, not including exercisable options, total 424 million shares worth about $52 billion at Friday’s closing price of $123.15 a share.

Simply put, if he could tap all of those shares as collateral under Tesla’s rules, he’d be allowed to borrow about $13 billion. That’s only a bit more than he planned to borrow in April as part of the original Twitter deal using just 40% of his shares as collateral, underscoring how his borrowing power has shrunken with the collapse of the car company’s share price. He later scrapped those proposed margin loans to fund the deal amid investor concerns over the risk.

Read more at the Wall Street Journal here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan