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Elon’s Church Plate & Cathie Wood’s Downfall

Elon Musk
Photo: Dimitrios Kambouris/Getty Images
William D. Cohan
May 8, 2022

Elon Musk is slowly but surely filling his $21 billion hole. It’s actually pretty impressive, when you think about it, especially when you take into account the pie-in-the-sky projections he’s been peddling. There aren’t many among us who could personally buy a company that struggles to make money, for $44 billion, and then pay for it by mortgaging the company itself; margining some $60 billion of stock in another company; and finally going hat-in-hand to friends and investors to find a large portion of $21 billion of additional equity. But that’s exactly what Elon is in the process of methodically doing to buy Twitter. 

According to a new S.E.C. filing, Elon has attracted another $7.139 billion in fresh equity from outsiders. The filing also reveals that the $12.5 billion margin loan that Morgan Stanley, Bank of America, Barclays and other banks were providing to him appears to have been reduced now to $6.25 billion. There’s no explanation why, of course, but that will take some pressure off his Tesla stock: If Elon is only getting a margin loan for $6.25 billion, instead of $12.5 billion, he only has to put up Tesla stock worth $25 billion as collateral, as opposed to $60 billion. That’s a big difference. In short, this new structure decreases the risk Elon is putting on Tesla, but increases his task of finding even more equity.