(Reuters) – Elon Musk withdrew a loan of $1 billion from SpaceX – the two-decade-old rocket company run by the billionaire – around the same time he was acquiring Twitter, now known as X, for $44 billion, the Wall Street Journal reported on Tuesday.
SpaceX Loan Approval
In a strategic financial move, Elon Musk secured a substantial loan of $1 billion from SpaceX, the aerospace manufacturer and space transportation company he founded. This loan coincided with Musk’s ambitious acquisition of Twitter, which was subsequently rebranded as X. The Wall Street Journal’s report sheds light on the timing and details of this significant financial transaction.
Timing and Execution
The loan in question was officially approved by SpaceX in October, with an interesting twist—it was backed by some of Musk’s own SpaceX stock. However, what’s truly remarkable is that Musk wasted no time in drawing down the entire loan within the same month. This swift action, as documented in the report, took place simultaneously with his assumption of ownership over Twitter (now X).
Complex Financial Arrangements
Elon Musk, a serial entrepreneur and business magnate, has a history of leveraging his holdings in various companies for financial gain. Notably, he has had arrangements with banks allowing him to borrow against his shares in his electric vehicle (EV) manufacturer, Tesla. Interestingly, SpaceX, which remains a privately held company, has served as Musk’s lender in this case. This financial maneuver, while not uncommon among high-profile entrepreneurs, added a layer of complexity to Musk’s already intricate financial situation.
“Elon Musk has had arrangements with banks to borrow against his shares in his companies, including electric vehicles (EV) maker Tesla, while privately held SpaceX has served as his lender,” the report stated.
Musk’s Dominance at SpaceX
Elon Musk’s significant stake in SpaceX positions him as the company’s largest shareholder, with a commanding 42% ownership share. Furthermore, he wields almost 79% of its voting power, as reported in March. These figures were substantiated by a filing with the Federal Communications Commission. Such a dominant presence underscores Musk’s deep involvement in the operations and decision-making of SpaceX.
SpaceX’s Financial Status
According to the report, SpaceX boasted an impressive financial standing at the close of the previous year. The company held a substantial $4.7 billion in cash and securities, providing a strong financial foundation for its ambitious endeavors in space exploration and transportation.
Responses from SpaceX and X
As of the time of reporting, neither SpaceX nor X had issued an immediate response to Reuters’ request for comments regarding this financial development.
Challenges and Share Sales
This financial move by Elon Musk was a pivotal moment in his business trajectory. In 2022, the billionaire entrepreneur sold a significant portion of his shares in Tesla, both before and after the Twitter acquisition. These transactions amounted to approximately $40 billion in sales. While these actions were aimed at diversifying Musk’s holdings, they did not sit well with some Tesla investors, leading to frustration and concerns about the future of the electric vehicle manufacturer.
Tightening Borrowing Rules
In April 2023, Tesla disclosed that it had implemented stricter rules governing Musk’s ability to use his stake in the company as collateral for borrowing money. This development, highlighted in the WSJ report, reflected the company’s efforts to address potential financial risks associated with Musk’s financial activities.
Elon Musk’s Expansive Ventures
Beyond his involvement with Tesla, SpaceX, and X, Elon Musk is a co-founder of Neuralink, a pioneering brain-chip startup. This diverse portfolio of companies underscores Musk’s innovative spirit and his commitment to pushing the boundaries of technology across multiple industries.