Elon Musk Faces Margin Call on Loan Used to Purchase Twitter

By 247patrick Published Dec 30, 10:48PM EST

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Elon Musk Faces Margin Call on Loan Used to Purchase Twitter — © Chesnot / Getty Images

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

Contact [email protected] for any questions or corrections.

1INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org).2The probability of a member receiving $3,000 is 0.028%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Members must fund their account with a minimum of $50.00 to qualify. The probability percentage is subject to decrease. Members are only eligible for the Stock Award promotion upon opening their first brokerage account; subsequent cash brokerage accounts are ineligible for the promo, including for members with multiple accounts.

3Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees.

4There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event.

Follow 24/7 Wall St. on Google