The inside story of how Elon Musk won Twitter—and could still lose it

April 30, 2022, 11:00 AM UTC

For a man seeking the biggest margin loan in history, Elon Musk was surprisingly calm. 

It was Easter weekend, and Musk was deploying a charm offensive to court lenders. “He was disarmingly normal,” says a source who participated in a 45-minute video call with the Tesla CEO, who was piecing together the funding for his just-announced $44 billion bid for Twitter. “A lot of tech entrepreneurs will say, ‘If you can’t keep up with me, you’re wasting my time. Elon had strong opinions, but he wasn’t arrogant.’”

But the world’s richest man was more than just easygoing. He was willing to roll the dice to make the deal work, according to the source. Musk granted the lenders a deep protective cushion that was essential in clinching the deal. In a detail that has not been previously reported, Fortune has learned that Musk provided a blanket, personal guarantee on the entire $12.5 billion loan secured by his Tesla shares. Hence, if Musk is unable to repay the loan by selling the Tesla shares he’s using as collateral, the creditors could call on anything he owns, including his other Tesla holdings, his equity in Twitter, his 46% holding in SpaceX, his stake in the Boring Co., and sundry personal assets. 

In other words, Musk is putting everything on the table in his bid to buy Twitter. For sheer entertainment value, the saga of how the iconic billionaire tweeted his way to what would be the third-biggest tech takeover deal of all time is about as jaw-droppingly exciting as business ever gets.

But look past the audaciousness of Musk’s gambit and there are some serious questions to consider, such as: How can a company that owns the public and private data of millions of users switch owners with zero public scrutiny? Is a billionaire with an agenda—his existing set of business interests; his own definition of “free speech”—the right person to control an online platform that has effectively become a digital public square, beloved by politicians, journalists, and activists? And will Musk’s single-minded pursuit of Twitter significantly reduce the market value of Tesla—the biggest source of Musk’s own incredible wealth?

Since the Twitter deal was announced on April 25, Tesla’s stock has fallen about 13%—in the process shedding some $131.8 billion in market value, or 2.4 times the price that Musk has agreed to pay for Twitter. Tesla’s market capitalization still stands at around $900 billion. But that only underscores the risk involved for Musk is taking on yet another herculean challenge. “Musk is the heart and lungs of the Tesla story,” Wedbush analyst Daniel Ives wrote in a recent note to investors, adding that shareholders will increasingly fret that he’s “being pulled in too many directions.”

Some of Tesla’s large investors are privately fuming. In reaching for a relatively small, slow-growing company business like Twitter, they feel, Musk is endangering the value of a world-changing company—and one of the best-performing stocks of the past five years. “It’s all anyone’s talking about,” one investment advisor at a London-based investment bank told Fortune about the deal. Investor clients, analysts, and investment bankers are all watching with fascination the ups and downs of the Twitter share price—and that of Tesla—he said. And they’re all seeing the same thing: The markets are giving the deal, as it’s currently constructed, ever-worsening odds.

To be sure, Musk has never particularly cared about how others view his odds. “Musk has always had his back against a wall,” Wedbush’s Ives told Fortune, pointing to his ability to undermine naysayers with successes at Tesla and SpaceX. “So when he looks at Twitter, he thinks, ‘Why can’t I fix it?'” Musk’s history is one of a tinkerer whose curiosity about solving a problem starts pulling on a thread, only to unravel something that becomes a full-blown passion.

Many may have forgotten that Musk’s takeover of Twitter has echoes of his arrival at Tesla nearly two decades ago. Initially an investor armed with the proceeds from his stake in PayPal, where he’d been forced out, Musk became Tesla’s chairman in 2004, then appointed himself CEO in 2008 after some damaging cost overruns. “That’s part of the reason I decided to take over as CEO. I have so many chips on the table,” Musk said at the time. “I need to steer the boat completely.”

Musk’s latest power move is one of those giant bets that—if it works—will be studied for decades to come. No sensible business school professor would advocate that the CEO of a Fortune 500 company should lever his personal fortune to buy a completely unrelated, money-losing business. But those same professors probably would have advised Apple to stay far, far away from the challenging business of running retail stores as well. That’s the thing—it’s only evident in hindsight whether big, counterintuitive leaps are going to pay off.  

Still, there’s one last outstanding question, and it’s a big one: Will this deal actually get done? A close analysis of the deal’s financing demonstrates there is still a very real chance that this deal could fall apart, leaving the world’s richest man with a $1 billion tab to pay.

This is the story of how one of the business world’s most fascinating deals played out over three weeks in April—and how it may yet unravel. 

Musk builds his stake in Twitter


That’s the number reported on Line 5 of the Schedule 13G that was filed by Elon R. Musk dated March 14 and disclosed publicly on April 4. Under the Securities and Exchange Act of 1934 any person or persons owning more than 5% of a public company must disclose their stake with the agency. And Musk was now the owner of a 9.2% stake in Twitter, made up of 73,486,938 shares, having quietly started building his stake in January.

A more than considerable amount of ink has been spilled on Musk over the years and what makes the world’s richest man tick. As Fortune wrote when naming Musk the businessperson of the year in 2020: “Ask chief executives in any industry which CEO most inspires them, and far and away it is Musk’s name that most often crosses their lips. They say Elon Musk is the rocket man, the iron man, the savior of the sins of a fossilized auto industry. He is an ambition-emitting entrepreneur who has enough executive aptitude to make the impossible possible. He is a designer, a technologist, and a Renaissance man without peer. He is a turnaround artist with astonishing verve and little apparent fear.

Yet ask executives which CEO vexes them the most, and Musk’s name is first again. To some he is a con, a bully, a toxic male messiah who can’t take criticism. To others he is a hypocrite, a fake, a reckless distraction unfit to lead us into the future. Musk is a taskmaster who plays fast and loose with the rules. He’s a homeless billionaire who takes us all as fools.” (Musk did not immediately respond to Fortune’s request for comment via his companies Tesla and SpaceX.)

It’s that quixotic mix the Twitter board was confronted with when Musk’s stake was disclosed on April 4. Twitter’s board includes Bret Taylor, the co-CEO of Salesforce, who joined the board in 2016, and Twitter’s controversial ex-CEO and cofounder Jack Dorsey, who will step down from the board in May and recently called Twitter’s board the “dysfunction of the company.”

Indeed, as Fortune reported: In the past four years, Twitter’s assets have nearly doubled to almost $14 billion, but Twitter generates no more cash from operations than before it added that extra $6 billion in capital. Since 2018, its free cash from has careened from a positive $856 million to a deficit of $379 million for 2021. The growth in its customer base is flagging. From the start of 2019 to mid-2021, its "monetizable active users" swelled by an average of 10 million every three months. But in the 18 months ended this past December, the pace slowed by half. Meanwhile, expenses exploded. From July of last year until the Musk bailout appeared, Twitter's shares fell 24%.

Twitter’s long-term performance for investors, in fact, is one of the worst in the annals of Big Tech. Since its IPO in 2013 through April 1st of this year, Twitter has provided a cumulative return to shareholders of minus 12.4%, versus a total gain of 206% for the S&P 500. At best, Twitter’s board and leadership had presided over an immensely popular, controversial and basically unprofitable enterprise for years. 

“When Musk bought the 9% stake in Twitter, you knew this was going to be a Game of Thrones [situation],” Wedbush analyst Ives says. “After 22 years on Wall Street covering hundreds of M&As, I mean, this saga is one for the history books. I'd describe my conversations with investors as confused, tense, and sometimes almost laughter.”

Just one day after the stake was disclosed, Twitter CEO Parag Agrawal, who is also a director of the company, tweeted that the company was appointing Musk to the board, writing, “Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.” 

For another investor, in another time, that might have been the end of the story. Powerful investor joins the board and agitates for change behind closed doors. But of course, this tale was only beginning.

On April 9, just days after being offered the seat, Musk had abruptly changed course. He started out on that Saturday morning by retweeting a list of celebrity accounts on Twitter that had large followings with the comment, “Most of these ‘top’ accounts tweet rarely and post very little content. Is Twitter dying?” It turns out, at around that time, Musk had informed the company that he would not take the board seat, Agrawal revealed the next day. 

“We were excited to collaborate and clear about the risks,” Agrawal wrote in a note to Twitter’s staff that he tweeted out late April 10. “We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders was the best path forward.”

Musk’s move, however, was strategic: Turning down the board seat opened the door for his later offer to buy Twitter, since he would have been limited to a maximum stake of 14.9% of Twitter’s common stock had he accepted the seat, per an 8-K filing with the SEC dated April 4. 

It was then that Elon’s larger plan started to take shape. Under a heavy veil of secrecy, Musk huddled with a small army of executives close to him, as well as bankers and lawyers representing some of the bluest blue-chip names on Wall Street and in the legal world. 

The point person for the negotiations was Musk’s closest lieutenant, a figure about whom quite little is known. Since 2016, Jared Birchall has run Musk’s Texas-based family office. He has also, at various points, served as chief executive, chief financial officer, and president of Musk’s brain chip company Neuralink—at least on paper. Musk directed Twitter to “call my family office with any questions” about the offer, per an SEC filing dated April 13, as Reuters reported. Birchall has eschewed interviews with the press, but he worked at Morgan Stanley as a senior vice president for private wealth management from 2010 to 2016, per his LinkedIn. Birchall did not respond to requests for an interview. 

All the pieces in place, on April 13, Musk fired his first shot across the bow to the Twitter board. The Tesla CEO seemed intent on leaving the board with little wiggle room through his communications, as chronicled by a filing to the SEC that became public the next day. The filing includes the following texts from Musk to Taylor:

“As I indicated this weekend, I believe that the company should be private to go through the changes that need to be made.”

“After the past several days of thinking this over, I have decided I want to acquire the company and take it private.”

“I am going to send you an offer letter tonight, it will be public in the morning.”

“Are you available to chat?”

Following these texts is a “voice script,” or what appears to be a summary of Musk's comments in a phone call with Twitter's board.

“I am not playing the back-and-forth game.”

“I have moved straight to the end.”

“It's a high price and your shareholders will love it.”

“If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.”

“This is not a threat, it's simply not a good investment without the changes that need to be made.”

His offer was to acquire all the outstanding shares of Twitter for $54.20 per share—a 38% premium over the closing price on April 1, 2022. And per the filing, Morgan Stanley was engaged as Musk’s financial advisor. The bank is serving as the chief bank loaning Musk the money, and Morgan Stanley Investment Management also owns more than 8% of Twitter’s stock, according to S&P Global Market Intelligence data.

The board wasted no time in firing back. On April 15, Twitter put out a press release announcing the board had “unanimously adopted a limited duration shareholder rights plan,” or, in other words, a so-called poison pill. And in doing so, Twitter was threatening to dilute Musk’s more than 9% stake in the company, if he opted to continue to amass a position in the public markets. “It was almost necessary,” says Ann Lipton, an associate professor of law at Tulane University. “That’s how they control the negotiation.” 

Pioneered in the 1980s by Wachtell, Lipton, Rosen & Katz founding partner Martin Lipton, poison pills are effectively a tool used by corporate boards to ward off hostile buyers by offering other investors a chance to buy shares on the cheap in the case of a certain event. And they work extremely well. “Essentially, there’s no such thing as a hostile tender offer, because the poison pill is so impenetrable,” says Lipton, the Tulane professor (who is no relation to Martin Lipton). 

In Twitter’s case, if and when Musk acquired 15% of the outstanding shares in the company without the board’s approval, investors would have a chance to buy discounted preferred stock in the company. The preferred shares that investors would be buying, under the terms of the poison pill, would grant 1,000 votes per share, completely diluting Musk’s power.

Given all this hustling and Musk's stated intention of dumping his Twitter shares if the board rejected his bid, Twitter had little time to find another suitor, even if there was one in the wings. But it's not clear there was. “We view this as a turning point and likely came from the Board’s realization that an alternative bid from a ‘white knight’ may be difficult to come by, especially following the decline in asset prices from social media companies in recent weeks/months,” CFRA analyst Angelo Zino wrote in a note. “Despite TWTR's tactic to instill a 'poison pill,' it appears that Elon does have the Board backed into a corner.” New York Magazine's Jen Weiczner reported that "Goldman Sachs, on behalf of Twitter, had gone out and asked every other potential buyer it could think of to swoop in and make a better deal—and gotten a hard pass."

Another factor likely weighing on the minds of Twitter's board: Republican members of the House Judiciary Committee reportedly sent a letter to board members requesting that they “preserve all records and materials relating to Musk’s offer to purchase Twitter, including Twitter’s consideration and response to this offer, and Twitter’s evaluation of its shareholder interests with respect to Musk’s offer.”

Musk now had the upper hand. But there was still one outstanding question: Where would the money come from?

Musk woos Wall Street

Given Birchall’s connections to Morgan Stanley and Musk’s long-time relationship with the bank, it’s little surprise they would jump into the mix. (Morgan Stanley was one of the bookrunners for Tesla’s IPO in 2010.) And Morgan Stanley, in addition to leading the financing, also “led the process of getting other banks involved,” according to Bloomberg. Other banks involved in financing the bid were Bank of America, Barclays, BNP Paribas, and MUFG (Mitsubishi UFJ Financial Group).

The source close to the deal that spoke to Fortune said that, “The lenders would only get comfortable with his financing plans if it was a friendly offer.” Adds the participant: “They wanted to make sure it wasn’t an ugly, controversial, hostile situation. Those are bad for business.”

The video call with Musk stood apart from a typical meeting where a private equity firm pitches banks to finance an LBO, or a leveraged “take private” of a public company. “In those cases, the sponsor will present a 100-page deck with all kinds of financial detail,” says the person present. “But Musk didn’t present his own numbers. He just said, ‘We use the EBITDA estimates from the buy-side security analysts.’ The banks were comfortable with that approach because there was so much public information available about Twitter’s finances.”

By this account, contrary to press reports, Musk said nothing about cutting costs or firing people. “Sure, he said the wrong people were running the company, but nothing about letting rank-and-file people go,” recalls the individual. “His focus was on how Twitter represented an under-managed revenue opportunity. He disagreed with Twitter’s strategic direction.”

Instead, Musk slammed Twitter for allowing “spam” and “too many bots” that discourage engagement. He discussed growing the ranks of content creators on the platform by following the YouTube and Facebook models that “pull in creators by enabling them to make money.” Another strategy: Launching tiered subscription services, a feature, he said, that would allow Twitter to enter the payments field. According to the source, Musk discussed a blueprint based on adopting what similar platforms do to increase revenues and that Twitter isn’t doing. Musk stated that Twitter could add those businesses without swelling costs, greatly expanding its margins.

In total, Musk was able to secure commitments from a consortium of 12 lenders, for $25.5 billion in debt financing. Interestingly, two of the banks—BNP and Société Générale—were far outside the usual tech financing circles. Gilles Babinet, co-chair of France’s National Digital Council, sees their involvement in the deal as a way for them to overcome a long problem they’ve been wrestling with—of being old, traditional banks, disconnected from the new economy. However he says it comes at a very difficult time for both of them, as they have been pushed to leave Russia where they’ve invested heavily. 

Of the total amount Musk cobbled together, $13 billion comes via four separate term bridge and revolving credit facilities, and $12.5 billion as a “margin” loan secured by Tesla shares. Musk has also agreed to contribute $21 billion in cash, as equity, from his personal fortune. (The total financing of $46.5 billion is higher than the $44 billion purchase price because Musk will refinance part of Twitter’s maturing debt.)

But the banks don’t just ante up that kind of money without a big safety cushion. 

According to the fine print hammered out, it was agreed that Musk must pledge as collateral five times the $12.5 billion amount, or $62.5 billion. At Tesla’s share price of $1,001 before Musk clinched the deal, he would have needed to provide 62 million shares as collateral. The recent price drop in Tesla to $871 per share means that he’ll need to tie up far more stock—some 72 million shares or an additional 16%, to meet the $62.5 billion requirement. Seventy-two million shares equals 44% of Musk’s current holdings of 163 million shares.

Musk must have seen the potential pitfalls: A steeply falling price could force him to dump shares in a hurry. The agreement stipulates that if the value securing the loan falls from $62.5 billion to $36 billion, Musk would get a margin call that forces him to contribute at least $14 billion in cash, or sell shares, with the proceeds paying down the margin loan sufficiently to restore the required loan-to-value ratio. He can’t use additional shares to close that gap. Hence, he might well have to sell a big chunk of Tesla shares to meet the margin call.

Keep in mind, it would take a 40%-plus tumble in Tesla’s price to around $500 before Musk would face a margin call. But if that happens, he’d be forced to unload well over 10 million shares, including amounts needed to cover taxes, to sufficiently lower the margin loan. Obviously the lower the price, the more he would have to sell. Cascading sales could crater the stock price, especially since investors would fear even more big dumping ahead. Of course, the banks have protected themselves by securing the personal guarantee covering all of his assets. But Tesla’s owners could still suffer if the EV-maker’s shares are Musk’s most liquid asset, and hence the pile he grabs to meet margin calls.

The terms made the 12 banks comfortable enough to move forward. Bloomberg reported that after being approached on Saturday and working feverishly over the Easter and Passover weekend, “Most of the banks signed commitment letters Wednesday, which also happened to be April 20 or 4/20—a cannabis in-joke that Musk has often referenced.” It wasn’t the only allusion to 4/20 in the deal, either. The terms of the poison pill adopted by Twitter carried another one, as well. 

Meanwhile Musk continued to egg on Twitter’s board, tweeting Monday, April 18: "Board salary will be $0 if my bid succeeds, so that's ~$3M/year saved right there."

As James Woolery, founding partner in law firm Woolery & Co. and former head of North American M&A for JPMorgan Chase. explained to Fortune, there’s a reason why hostile takeovers are so few and far between these days—and virtually the only ones that can pull them off are spectacularly wealthy lone wolves. He cites the example of staggered boards. "Today, it's standard practice for the target's board to activate a poison pill," says Woolery. "The only way to cancel the pill is to lead a proxy battle by proposing your own slate of directors, and winning the majority of the seats. But in many cases, only one-third of the directors are elected at each annual meeting, so it can take two years to win the majority and terminate the pill."

In some cases, adds Woolery, the index funds that often own 25% or more of the shares are more inclined to back management than the likes of individuals and hedge funds, so another tough, unpredictable task is persuading advisors such as ISS that strongly influence the passive vote.

So Musk had to play the hand he was dealt. He’d have to go through the board, but in order to pressure them to take the deal he’d need to convince Twitter’s major shareholders to back him. Per reports from outlets including the Wall Street Journal, Musk began reaching out to some of Twitter’s active shareholders via video calls to garner support for the deal. (Several of Twitter’s largest active shareholders declined to comment to Fortune.)

The final weekend

It likely wasn't until around 4 pm E.T. on Friday, April 22, that the negotiations really ramped up. That’s because as every junior I-banker well knows (and laments), there’s a window between Friday’s closing bell and Monday’s opening bell where merger or takeover negotiations—aka ‘material’ discussions—can go on and nobody has to report them.

A few things to note: This was an unsolicited bid, meaning Musk’s side would not have been given access to Twitter’s books, as would happen during due diligence during a traditional acquisition or takeover. Also, Twitter’s board appeared to have very little leverage over the price. Though Twitter’s stock had traded in the upper $60s during the summer of 2021, it was now hovering just below $50. Shareholders would be getting a premium from Musk’s offer, meaning most of the negotiations were likely focused on ensuring that the deal happened. Or, at the very least, getting Musk to agree to pay a hefty fee if he ended up walking away. 

In an April 24 letter to Twitter Chairman Bret Taylor, Musk reiterated his interest in paying $54.20 a share for the company, tightening the screws a bit more. “This is binary—my offer will either be accepted or I will exit my position,” Musk wrote, noting that the stock could reverse the 38% “premium” it enjoyed since his Twitter stake was disclosed. “I would respect the outcome of [a] vote if the shareholders prefer the management plan to my $54.20, and exit my position entirely if that is the outcome of the vote,” Musk wrote.

But in the end, whether or not the board believed Musk could turn the company around—or feared his involvement would be a death knell for the platform—it didn’t much matter. There was no white knight with a better offer. And thus there was no viable path for shareholders to reap anything close to Musk’s $54.20 offer. The board may not have wanted this deal, but they had little choice but to take it. 

On Monday April 25th, a Twitter press release landed at 2:50 pm ET. “Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company.”

Taylor is quoted as calling the deal the “best path forward” for shareholders, while Musk rhapsodized about making Twitter “better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential—I look forward to working with the company and the community of users to unlock it." 

Later that day Agrawal and Twitter’s chairman Taylor held an all-hands meeting with employees, who to this point had largely been left to follow the drama in the media and, of course, on Twitter. “They’ve had a town hall with employees and some of the conversations have been leaked to the press,” Lars Schmidt, founder of HR recruiting firm Amplify, told Fortune. “A lot of employees raised some concerns about the potential or perceived direction that Elon might take Twitter as a private company. When you hear the Twitter executives responding to that, much of it is—they don't know what the direction would be. The reality is we just don't know. And I think that in the absence of certainty, speculation fills that void.”

If past is prologue, Musk’s behavior once he secured a stake in Tesla may be instructive for Twitter insiders. After taking the helm at the automaker, Musk began micromanaging everything from the fiberglass in body panels to the design of door latches. He overhauled the assembly-line process from the bottom up and insisted on Tesla owning and operating exclusive dealerships. But Musk's sharp elbows came across as abrasive to Tesla's founders. “I should have been more careful. I shouldn’t have let [Musk] take a disproportionate control of the board,” Tesla co-founder Martin Eberhard told Fortune in a 2008 interview. “I have no issues with Tesla Motors as a company. I do have problems with Elon and the way he treats people.”

Two days after Twitter’s all-hands meeting, on April 27, the merger agreement was filed with the SEC. ​​Under the terms, “Twitter is subject to customary ‘no-shop’ restrictions,” meaning it can’t solicit or start any talks with other potential acquirers, or share non-public information that could be used in a competing bid. Outstanding employee equity-based awards and stock options will be converted to cash once the deal is finalized, per the merger agreement. This may add to employee concerns about the takeover, since it could cut them off from long-term appreciation of Twitter’s stock had it remained public.

Both parties face a $1 billion termination fee—for Twitter if it accepts a rival bid or recommends shareholders vote against the deal or otherwise breaches this agreement; For X Holdings I (i.e. Musk) if he can’t satisfy his financial obligations or meet the closing conditions. Either Twitter or Musk can terminate the fee after Oct. 24, 2022, but this deadline can be extended six months if antitrust or regulatory drag approval out. 

Will the deal for Twitter go through?

About that billion dollar breakup fee. 

Yes, it sounds like a big number. But some dealwatchers say it’s low: Tim Pagliara, chief investment officer, CapWealth, a Franklin, Tenn.–based wealth management firm, told Fortune that the number is a red flag, and "is at the low end for a transaction of this size." 

"If the breakup fee was $5 billion," he continued, "Twitter's stock price would likely be higher. The breakup fee itself says something about the likelihood of the deal getting done." Pagliara sees the puny divorce levy as a sign "there's not a high level of confidence that a deal will be able to pass the various hurdles ahead, including regulatory approval and Musk's further due diligence of Twitter."

Another problem for Musk, as Fortune reported, are the short-sellers circling Twitter's stock. As of April 28, short positions as a percentage of Twitter's overall float stood at 5.52%, according to S3 Partners, a firm that analyzes such trades. That's not an alarming number, but what pops out is the recent surge in short bets against Twitter.

The number of Twitter shorts has doubled since the start of the year, and has really picked up in the past two weeks. According to S3 Partners, investors shorted more than 7.4 million Twitter shares over the previous 14 days, amounting to a monster $361.4 million bet that the Twitter share price will go down, down, down.

Musk’s bigger problem, of course, is Tesla’s stock price, because his financing depends on it staying elevated. And yes, Tesla’s ardent fans can barely imagine their favorite sliding to $500. Still, Tesla’s sporting a towering price-to-earnings multiple of 162, meaning if its earnings slow instead of sprinting, its value could plummet big time. Then, cascading margin calls could grease the descent.

From April 26 to 28, Musk sold almost 10 million shares to raise around $9 billion. That cash will provide a big part of the $21 billion in equity he must raise. He could also recruit a private equity partner to furnish the balance. Nothing in the credit agreements blocks Musk from raising the funds by once again, getting a margin loan. But Tesla’s bylaws limit the loan-to-value ratio on any credits that its directors secure to 25%. Hence, if Musk wanted to raise another even $10 billion, he’d have to pledge an additional $40 billion in his shares. Then, about two-third of his holdings would sit fenced-off backing bank loans, greatly increasing the size of the necessary sales, and damage to Tesla’s share price, if he starts getting margin calls.

Musk also faces pressure from the ongoing outlays and costs of owning Twitter. Twitter will be paying in the range of $600 million a year in additional interest on the $13 billion in debt financing. The margin loan will cost Musk over $400 million a year in interest, and he’ll need to fund $3 billion annually in amortization. By the way, the fee for the credits alone comes to $62.5 million.

Besides, Twitter is losing money. In its Q1 earnings announcement, it disclosed an operating loss of $128 million for the quarter and a negative margin of 11%. Over the past four quarters, it’s suffered a shortfall in free cash flow of over $600 million as expenses have far outpaced revenues. It’s possible that Musk, who as of yet hasn’t revealed his plans to improve Twitter’s profitability, will need to cover his new property’s losses from his own resources.

Still, the odds that the deal will happen are much better than 50-50. Musk is handing a rich windfall to Twitter’s owners, including the top individual shareholder and former CEO Jack Dorsey. Just prior to Musk's appearance, Twitter was fetching under $39. If the transaction were a certainty, Twitter would be selling close to Musk’s $54.20 price. But it’s hovering around $49, underscoring the lingering skepticism. And what could scotch the transaction is a bigger drop in Tesla’s share price that might push Musk to exit, perhaps bowing to pressure from big shareholders.

In the end, the lasting impact of this drama that so captivated the business world for more than two weeks in April will likely not be about Twitter at all. When all is written, what will matter most is how Musk’s quixotic quest affects Tesla. Ironically, the public square that Musk has exploited to such brilliant effect—promoting his green economy tour de force—now looms as a threat to that very creation.

—With additional reporting by Sheryl Estrada, Jessica Mathews, Vivienne Walt and Bernhard Warner

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Read More

CryptocurrencyInvestingBanksReal Estate