Elon Musk, the CEO of Tesla, SpaceX and X (formerly known as Twitter), reportedly borrowed $1 billion from his space company SpaceX in October last year, around the same time he was acquiring the social media platform for $44 billion. The Wall Street Journal revealed this information on Tuesday, citing internal documents from SpaceX.
The loan, which was backed by some of Musk’s shares in SpaceX, was approved by the company in October and Musk withdrew the entire amount the same month. He paid back the loan with interest in November, according to the report. It is unclear if the loan from SpaceX was used to fund a portion of the purchase of Twitter, which Musk renamed as X after taking ownership.
Musk’s acquisition of Twitter was one of the most surprising and controversial deals in the tech industry last year. He announced his intention to buy the platform in September, saying he wanted to “make it fun again” and “bring back the magic”. He faced opposition from some Twitter shareholders and users, who feared he would change the core features and values of the platform. However, he managed to secure enough votes to complete the deal by October 27.
Musk’s Financial Situation
A large portion of Musk’s wealth is tied to his shares in his companies, especially Tesla, which is valued at over $1 trillion. He has pledged some of these shares as collateral while borrowing from banks, giving himself a massive line of credit for when he needs it. However, this also exposes him to the risk of margin calls if the stock prices fall significantly.
As of November 2021, Musk had pledged around 36% of all shares he owned in Tesla, worth more than $100 billion. He also sold a large chunk of his Tesla shares in 2022, both before and after the Twitter deal, bringing his total sales to about $40 billion. These moves drew anger from some Tesla shareholders, who expressed frustration about the Twitter acquisition, which they saw as a distraction that was damaging the electric car maker.
In April 2023, Tesla disclosed that it had further tightened rules around Musk using his stake in the company to borrow money, according to the WSJ report. This could limit his ability to access cash from his Tesla shares in the future.
SpaceX’s Role
SpaceX is Musk’s two-decade-old rocket company that aims to colonize Mars and make humanity a multi-planetary species. It is one of the most valuable private companies in the world, with a valuation of $100 billion as of August 2023. It has also been profitable for several years, generating revenue from launching satellites and astronauts for NASA and other customers.
Musk is by far the biggest shareholder in SpaceX, owning 42% of its shares and holding nearly 80% of its voting power, as of March 2023. He has used SpaceX as his lender before, borrowing money from the company to buy more shares or pay taxes. However, the $1 billion loan he took last year was a significant portion of the $4.7 billion worth of cash and securities SpaceX had on hand at the end of 2022.
SpaceX did not immediately respond to a request for comment on the loan. X declined to comment on the report.