What Elon Musk’s Move Means for Twitter, Tesla Stakeholders

Elon Musk’s pending $43 billion purchase of Twitter stands to be one of Wall Street’s largest-ever leveraged buyouts. Maryland Smith Clinical Professor of Finance David Kass, a stock market expert who has held senior economist positions with the federal government, gives some quick takes on implications for stakeholders of both Tesla and Twitter.

What are implications of Musk borrowing $12.5 billion secured against his stock of Tesla? Kass: Musk's $12.5 billion margin loan is secured by his equity stake in Tesla. Tesla shares fell 12% to close Tuesday at $876.42.  If the stock fell below $740, which it last did on February 24, Musk would not have enough to cover the full $12.5 billion according to Bloomberg calculations. However, his current wealth is estimated at $252 billion according to Bloomberg Billionaires Index.

What compensation can shareholders expect? Kass: Shareholders can expect to receive $54.20 per share when the deal closes in about 6 months after regulatory reviews.

What’s ahead for Twitter employees who own Twitter stock as part of their compensation? Kass: Twitter employees will no longer receive Twitter stock as part of their compensation plan since the shares will no longer be publicly traded. The stock that they currently own can be sold in the open market until the deal closes, after which they will receive $54.20 per share.

Livestream Event

Kass, who teaches advanced financial management and business finance, will host a livestream of the Berkshire Hathaway Annual Shareholders Meeting, from 9:45 a.m.-4:30 p.m. Saturday (4/30) in Van Munching Hall 1212 (Tyser Auditorium). Kass, who blogs about Warren Buffett and Berkshire Hathaway, will answer questions and lead discussion related to the meeting in Omaha. The event, including breakfast, lunch and snacks, is open to everyone with advance registration via https://go.umd.edu/qVW.