Elon Musk, currently the richest person in the world by far, has sometimes complained about running out of money. His wealth is tied up in company shares, and turning shares into cash for short term gain is an unappealing prospect—a little like the point-oh-one-percenter version of raiding your 401(k). It triggers taxes, and can decrease your net worth in the long term.
If SpaceX goes public soon, Musk will lose a much easier source of short-term cash: his company coffers.
An investigation published recently in the New York Times is about some ugly-but-apparently-legal financial moves Musk has made—especially $500 million in loans from SpaceX to Musk himself.
The Times is spotlighting something important right now: Elon Musk has a pattern of wanting the companies he runs to be private, not public, and historically treats his private companies like big pools of money when it’s possible and beneficial to do so. And crucially, when a company is publicly traded—which by all accounts SpaceX is about to be—this sort of thing will be much less possible. That’s one more reason for Musk to dread leading yet another public company.
And we can be fairly sure he is dreading it, assuming we should take seriously what he’s been saying for years about public companies. In 2013, for instance, he wrote in an email to SpaceX employees that he didn’t want SpaceX to be a public company until his self-imposed mission to conquer Mars was accomplished, and that being involved in a publicly traded company is not “desirable” just in general. “Public company stocks, particularly if big step changes in technology are involved, go through extreme volatility, both for reasons of internal execution and for reasons that have nothing to do with anything except the economy,” he wrote.
Musk has gotten even more explicit about why this aspect of running a public company is such a pain. “We feel like we have a sort of moral obligation not to have a bad quarter and disappoint people,” he said on a livestream in 2023. If you’ve ever listened to a Tesla earnings call after a lackluster quarter, you can hear in his voice how annoyed he is to be explaining himself to shareholders, and, worse, taking questions from them.
So with that in mind, here are some of the gnarly financial moves compiled in the Times’ article to illustrate why it’s nice to not run a publicly traded company:
He told the Wall Street Journal that in 2008, when Tesla was suffering amid the financial crisis, he borrowed $20 million from SpaceX to prop it up.
In 2015, the Times says SpaceX started buying up Solar City’s debt at a time when he was that struggling company’s chairman. Eventually, after SpaceX had spent $255 million in this way, the Times says Tesla bought SolarCity for the equivalent of $2.6 billion. Musk says Tesla then repaid SpaceX for all that debt.
In 2018, the Times says Musk took out a nearly $100 million loan from SpaceX, at a very manageable 1-3% interest rate. No matter what your credit rating is, I bet you would not be able to get a loan that cheap. He then borrowed more and more, eventually racking up $500 million in personal debt, which he then paid back, plus $14 million in interest, in 2021.
And for good measure, the Times also provided examples illustrating why Tesla’s status as a publicly traded company might annoy Musk:
The Times says Tesla—which is publicly traded—implemented a new policy in 2023 limiting loan amounts by large shareholders, including Musk, if they use Tesla stock as collateral. This is an example of Tesla protecting itself from exposure to activities like, say, Musk reportedly using Tesla stock as collateral to secure the financing to buy Twitter.
In 2024, the Times says a pension fund that holds Tesla stock sued, claiming that Musk was harming Tesla by redirecting resources that were supposed to go to Tesla into xAI. A court filing reviewed by the Times apparently asks, “Could the C.E.O. of Coca-Cola loyally start a competing soft-drink company on the side, then divert scarce ingredients from Coca-Cola to the start-up?”
It’s worth noting that what was then known as Twitter ceased being a public company when Musk bought it. As X, the platform formerly known as Twitter became part of xAI, which became part of SpaceX earlier this year. If the SpaceX IPO goes through, Twitter is about to be publicly traded again.
