Investing

Elon Musk Faces Margin Call on Loan Used to Purchase Twitter

Tesla (US:TSLA) Chief Executive Officer Elon Musk had to meet a margin call from creditors holding the stock as collateral for loans financing his Twitter acquisition, Barron’s reported on Thursday.

A margin call is triggered when the value of the collateral securing the loan falls below an agreed ratio, and more cash or stock needs to go to the lender to maintain the account in balance.

The lender makes a margin call to protect itself from the risk of the investor defaulting on the loan.

Musk has been active on Twitter for years, frequently using the platform to make announcements about his various companies and projects.

In October 2020, he caused a stir when he announced on Twitter that he had secured funding to take Tesla private  $420 per share. This tweet led to an investigation by the Securities and Exchange Commission (SEC), which ultimately settled with Musk and Tesla in April 2021.

In order to fulfill the margin call, Musk had the option of paying back a portion of the loan, offering more collateral in the form of Tesla stock, or a combination of both. It is currently unclear what action Musk took to meet the margin call.

This article originally appeared on Fintel

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