Elon Musk Says He "Borrowed Money" From SpaceX to Help Fund SolarCity and Tesla
He's pretty damn good at shuffling around his assets.
Elon Musk has a lot of money. No, we’re not talking crazy Bill Gates-level money, but the solar energy, electric car, space exploration, and payment services tycoon is worth $14.2 billion these days, which is nothing to scoff at. Musk is the largest shareholder in SolarCity, Tesla, and SpaceX, and he’s not afraid to use the resources of one company to prop up another.
In fact, The Wall Street Journal reported that SolarCity’s biggest investor — the owner of the most “solar bonds” — is actually SpaceX. SpaceX bought $90 million of the $105 million solar bonds sold last month, and it’s not the first time. The Journal reports that Musk’s three main companies are all intertwined in a web of family connections, majority investors, and shareholders, all under Musk’s umbrella. That may seem sketchy, but Musk is either the founder, CEO, or CTO of all three of those companies, so it’s not as if he’s lording over a shadowy network of companies he doesn’t have a justifiable right to meddle with.
Musk has even taken out $475 million in personal loans to buy stock in his own companies when they’ve hit a rough patch (which he thinks is fine — after all, it’s only about five percent of his total net worth). In February, he “exercised options” to buy almost $100 million in Tesla stock, hoping to stave off a decline in their value. He told the Journal that he sees this as simply leading by example.
“If I ask investors to put money in, then I feel morally I should put money in as well,” Musk said. “I should not ask people to eat from the fruit bowl if I have not myself been willing to eat from the fruit bowl.”
He sees the three companies as an interconnected network, and wants to make sure that each leg of the tripod can help out the others, as it’s important that there not be some sort of house of cards that crumbles if one element of the pyramid of Tesla, SolarCity, and SpaceX falters.
This isn’t exactly an orthodox move, but then again Musk isn’t exactly an orthodox billionaire. Some corporate-governance experts are sketched out by the complete lack of personal-corporate divide in Musk’s financial divisions, especially as his companies have grown over the past half-decade — particularly when he takes out loans using stock from his other companies as collateral.
“As an analyst, it is often a red flag for me when companies and management direct loans between entities they have personal or financial interests in,” Nathan Weiss, founder and senior analyst at the independent research firm Unit Economics, told the Journal.
But Musk clearly sees himself as an “O Captain, My Captain” figure at the top of his companies, and wouldn’t attempt to sell out his other shareholders if business goes south. He told the Journal that he’s “made it clear to shareholders that I subscribe to the notion that the captain is the last person off the ship,” and that he would never sell his shares in Tesla, despite the company’s performance.
Fortunately for Musk, Tesla and SpaceX are both doing pretty well. Solar City is struggling, with stocks down almost 35 percent since the start of 2016, but with the other two legs of Musk’s tripod standing strong, it’s unlikely the whole “house of cards” is liable to topple anytime soon.