When Elon Musk acquired Twitter (now X) for $44 billion in October 2022, he didn’t simply write a check. Instead, he leveraged a significant portion of his Tesla stock to secure loans from major banks like Morgan Stanley, Barclays, and Bank of America. This high-stakes move has left Musk in a precarious position, as the fate of his social media empire is now tightly intertwined with Tesla’s stock performance.
Musk’s Collateral Play
According to reports from The Washington Post, Musk had already used more than half of his 170 million Tesla shares as collateral for loans even before the Twitter purchase. By 2024, financial filings revealed that Musk had pledged over 238 million Tesla shares—roughly one-third of his total holdings—to cover his personal debts.
Musk’s vast wealth is primarily tied up in his ownership stakes in Tesla and SpaceX, meaning liquid cash isn’t readily available. Instead of selling shares and paying massive tax bills, he uses them as collateral to secure loans. This strategy has worked well for him in the past until now.
The Risk of a Falling Stock Price
While Musk remains one of the richest people in the world, his financial empire is built on the assumption that Tesla’s stock will remain strong. However, Tesla’s stock has faced turbulence, and if the decline continues, the banks holding Musk’s loans could force him to sell his shares or even seize control of Twitter/X.
Tesla itself acknowledged this risk in its 2022 annual filing, warning that if its stock price dropped low enough, Musk might be compelled to offload shares. Such a sell-off could trigger a downward spiral, further weakening Tesla’s valuation and putting even more pressure on Musk’s financial commitments.
Could Twitter Be Repossessed?
The most alarming possibility is that Musk’s creditors could end up repossessing Twitter/X if he fails to meet his debt obligations. Given that his loans have already been on the banks’ balance sheets for nearly two years, longer than some unsold deals from the 2008 financial crisis, there is growing concern that lenders may soon demand repayment.
If Tesla’s stock continues to drop, Musk could face a situation where he is forced to choose between liquidating more of his Tesla holdings or surrendering control of X. Either scenario could have significant consequences, not just for Musk personally, but for Tesla’s stability and the future of Twitter itself.
In short, Musk’s $44 billion Twitter gamble has turned into a high-stakes game where a crashing Tesla stock could cost him far more than he anticipated.
