Elon Musk, the renowned entrepreneur, borrowed a staggering $1 billion from his own company, SpaceX, in October. This loan happened to coincide with Musk’s acquisition of the popular social media platform, Twitter. Musk ensured that he repaid the loan with interest the following month; however, the reasons behind this loan remain somewhat unclear.
It is worth noting that Musk has often utilized borrowing arrangements, leveraging shares within his vast array of companies. Among these companies, Tesla, the pioneering electric car manufacturer, holds the most substantial value and forms the cornerstone of Musk’s wealth. What makes this particular loan stand out is its source – it came directly from his privately held company, SpaceX.
As of now, Tesla, SpaceX, and Twitter have not provided any official comments or responses regarding this loan.
Musk’s acquisition of Twitter came at a hefty price tag of $44 billion, which ultimately led to the platform being renamed as “X.” Musk invested approximately $25 billion in cash towards this deal and even included a $1 billion break-up fee should the agreement fall through.
Though the outcome did not directly impact Tesla’s operations, the tumultuous journey surrounding the Twitter acquisition did cause some ripples within Tesla’s stock price. Investors were left speculating whether Musk planned to sell Tesla stock to secure funds or if his attention was being diverted from his role at Tesla due to the Twitter ordeal.
In premarket trading on Wednesday, Tesla saw a 0.7% decline in its share price.
Furthermore, it is essential to note that although Musk does not hold sole ownership of SpaceX (owning 42% of the company), he commands an impressive 79% of its voting power as of March, granting him significant leeway to secure loans from the company whenever necessary.
Last week, it was also reported that Tesla is currently under investigation for allegedly diverting company funds towards a secretive project involving the construction of a glass house.
Overall, the recent publicity surrounding Musk’s loan from SpaceX highlights the reality that even the world’s richest individual must maneuver their assets and find creative ways to generate cash when significant financial obligations arise.