As Tesla Inc. embarks on another effort to raise money, Chairman Elon Musk is also adding to his personal debts.
Tesla disclosed Wednesday as part of its stock and debt offering that Musk increased his own borrowing by more than $100 million, to $624 million. Morgan Stanley, the automaker’s longtime banker, is among the financial institutions that have lent Musk money, secured by Tesla shares.
The enigmatic Tesla CEO gets a nominal salary from the company and much of his wealth is tied up in stock. His borrowings fund an executive lifestyle and let him buy more Tesla shares, which gives him an incentive to perform well as CEO but also could put the company’s stock price at risk.
If Tesla shares were to fall in value, Musk’s lenders could force him to put up more collateral or sell the stock. That could put downward pressure on the price, according to Tesla’s prospectus.
Musk has been borrowing from Tesla’s underwriters for years, especially Goldman Sachs Group Inc. and Morgan Stanley. Both banks have been lead underwriters on most of the company’s stock and convertible debt offerings. They’re playing roles in Tesla seeking to raise $1.15 billion through an offering expected to price on Thursday after the market close.
The CEO’s borrowing “has been the case for a while and I don’t think impacts investor sentiment for now,” Cowen & Co. analyst Jeffrey Osborne wrote in an email. The loans are “certainly something for people to continue to monitor.”
Tesla shares rose 2.5 percent to close Thursday at $262.05.
In addition to being Musk’s largest lender, Morgan Stanley is Tesla’s eighth-largest shareholder, with a 2.4 percent stake. Its Tesla analyst, Adam Jonas, is one of the more bullish researchers of the stock, with a $305 price target.
A Tesla spokesman declined to comment.