Tesla’s Catastrophic Debt Addiction Should Terrify Investors
Ben Brown's original article for www.ccn.com reduced by 59%
Elon Musk bought a mountain of Tesla shares with borrowed money. Tesla is built on a precarious pile of debt that could come crashing down at any moment. It means Tesla can't convert the bonds into common stock as Musk would have hoped.
The enormous debt mountain doesn't seem to faze Elon Musk. In a recent SEC filing, Tesla warned investors about its debt problem. "Elon Musk has pledged shares of our common stock to secure certain bank borrowings.
If Mr. Musk were forced to sell these shares pursuant to a margin call that he could not avoid or satisfy, such sales could cause our stock price to decline." To back the loans, Musk pledged his existing Tesla stock as collateral.
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