Musk wealth pours in as fast as Twitter can use it

Elon Musk can't spend it fast enough. The Tesla chief executive has lined up a $46.5 billion financing package to buy Twitter, if he decides to give it a go.

It could entail him personally raising some $33 billion, on top of the $4 billion-worth of Twitter stock he already owns. That might require him to sell most of his Tesla shares that aren't pledged against loans.

But for him and Tesla's other shareholders, it's less risky than it looks. That's because Tesla's recent financial performance has triggered plenty more essentially free shares for Musk.

The math works like this. At the end of 2021, Musk held 173 million shares in the carmaker, plus 59 million options that could be exercised within 60 days – combined, a 21 per cent stake.

According to a June 2021 regulatory filing, more than 88 million of those shares were already pledged against personal loans. For the Twitter financing package, Morgan Stanley is providing a $12.5 billion loan that requires as collateral $62.5 billion worth of stock, or about 61 million shares at the current value.

If all the earlier numbers still hold, that would leave some 23 million shares unpledged, worth about $24 billion remaining.

Musk also has committed to provide $21 billion of additional equity financing to the Twitter deal. Unless a co-bidder joins Musk – a possibility, with private equity firms looking at the deal, according to news reports – that could mean selling almost all his unencumbered stock, ignoring cash Musk may have on hand and any tax liability.

Yet Tesla's sparkling first-quarter figures mean Musk has few worries, and perhaps Tesla investors shouldn't worry about his shares being in hock, either. The company's results were sufficient, when combined with previous performance, to surpass vesting requirements on three tranches read more of Musk's gigantic 2018 pay package.