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
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Source: Read Full Article