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Elon Musk eases Tesla stock pressure

Megan Hernbroth
May 13, 2022
Illustration of Tesla logo and Twitter logo on Elon Musk's shoulders

Illustration: Lindsey Bailey/Axios. Photo: Joshua Lott via Getty Images

Elon Musk was reportedly in talks to secure additional financing for his Twitter takeover, which would erase the need for his margin loan against Tesla shares, before tweeting Friday that the deal was "temporarily on hold."

Why it matters: Tesla stock has been dragged down, in part, by concerns over how this margin loan could impact the EV maker's financial future.

  • Tesla shares have fallen 25% since Musk announced his Twitter pursuit. They rose roughly 5% Friday following Musk's tweet casting doubt on the future of the deal.

By the numbers: In his initial financing plan, Musk planned to take out a $12.5 billion margin loan against his Tesla shares, which account for a majority of his wealth. Updated financing plans have lowered the loan amount to $6.25 billion.

  • Musk already sold $8.5 billion in Tesla stock to finance his bid, and there's speculation that he will need to sell even more.
  • Musk also committed more than half of his Tesla shares toward other borrowings as of June 30, Bloomberg reports. With a more limited stake at his disposal, any decrease in stock price could jeopardize his Twitter buyout.
  • Musk's exercise threshold for available shares stood at $837 for the initial $12.5 billion loan. With the current $6.25 billion loan, Musk's exercise threshold drops to $420.

Zoom out: The EV market is facing an industry-rocking supply chain crisis and materials shortages that are being felt on share prices.

  • As the industry leader, Tesla's stock has performed less poorly than its peers Rivian, Nikola and Lucid Motors, but is still down 40% year-to-date as of Thursday afternoon.
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