As Tesla’s share price continues to decline, Musk is at risk of defaulting on his past personal loans.
Elon Musk may be forced to sell shares previously pledged to secure certain personal loans, should Tesla stock continue to decline.
As pointed out by several online commentators, Musk is currently close to facing a margin call on the loans used to facilitate his 2022 purchase of Twitter.
Tesla shares were changing hands at $225.31 ahead of Wednesday’s market opening. The stock is down 41 percent since the start of the year, 47 percent since Trump’s inauguration, and 38 percent in the past month.Why It Matters
The electric vehicle giant rode a postelection rally to hit an all-time high in mid-December. Since that time, however, Tesla has been battling weak global sales, increased competition in the EV space, as well as protests and boycotts sparked by the CEOs involvement in the Trump administration and Department of Government Efficiency (DOGE).
Should Musk be forced to sell some of his shares to cover his personal loans, this could cause Tesla’s stock to decline further, as the company has warned previously.What To Know
A margin call occurs when a borrower no longer has enough equity to meet the broker’s minimum requirements. In Musk’s case, the price of Tesla stock used as collateral would fall below a certain price point, at which point he would be forced by the broker to either deposit more funds or liquidate assets—such as his holdings in Tesla or his other companies—to bring the account back to the required level.
