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Matt Levine

Elon Musk’s Funding for Tesla Wasn’t So Secure

If you’re looking for people to invest in the electric carmaker, try the people who already invest in Tesla.

It will probably be fine.

It will probably be fine.

Photographer: Joshua Lott/Getty Images North America

Traditionally, when the chief executive officer of a public company announces that he is planning to take the company private at $420 per share, and that he has secured funding for that offer, that means a couple of things. First of all, it means that he plans to make a firm offer to the board of the company to buy all of the shares that he doesn’t already own, for $420 per share in cash. Second, it means that he has enough money—or has agreements with someone who has enough money—to actually pay for those shares.

Last week Elon Musk tweeted “Am considering taking Tesla private at $420. Funding secured.” He followed it up by tweeting more definitively that “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.” Tesla Inc. has about 170.6 million shares outstanding, of which Musk owns about 33.7 million, meaning that he’d need about $57 billion to buy all the shares he doesn’t already own at $420 per share, plus perhaps another $10 billion to pay off bonds that come due on a change of control. And Musk’s tweets kicked off a week of speculation about where he had gotten the $60 or $70 billion he’d need for this deal.