A Tale of 2 Elon Musk Companies: SpaceX Raises $1 Billion for Starlink, Tesla Can’t Afford Toilet Paper

60 Starlink satellites begin to separate after deployment from the Falcon 9 second stage. (Credit: SpaceX webcast)

On the heels of the launch of 60 SpaceX Starlink satellites on Thursday comes news that SpaceX has raised $1.02 billion since the beginning of the year. CNBC reports:

SpaceX continues to accelerate its fundraising, as SEC filings indicate the company sought equity rounds of $500 million in January and $400 million in April. CEO Elon Musk had said those rounds were oversubscribed in terms of investor interest.

The filing on Friday, an amendment of the company’s April filings, shows that SpaceX did bring in more funding than expected. The company raised $1.02 billion since the beginning of the year – greater than the $900 million it sought across the two rounds. Gigafund, led by Luke Nosek (a PayPal co-founder and SpaceX board member) and Stephen Oskoui, once again invested in the round for SpaceX, people familiar with the fundraising told CNBC.

Meanwhile, things at Musk’s electric car company aren’t nearly as rosy.

Credit: CCN

After a quarter in which Tesla lost $700 million, the company raised $2.35 billion. Musk told employees in an email the new funding would keep the company afloat for only 10 months.

In the same message, he also implemented a “hardcore” cost cutting program as Tesla’s stock continued to sink to under $200 per share. Electrek reports:

Sources familiar with the matter told Electrek that teams at several Tesla facilities are going to some extremes in attempts to cut costs, including skipping on ordering office supplies – even toilet paper.

A source even said that some employees are bringing toilet paper from home to the office in an attempt to reduce their overhead….

One of the bottlenecks in deliveries is the detailing of the vehicles and as Tesla’s delivery volume increased, they relied on car washing businesses.

A source familiar with the matter says that some stores are now cutting down on the expense and in order to still complete the work, some employees are bringing the cars home and cleaning them on their own time.

The author of the story, Fred Lambert, writes that it’s “fairly incredible” that employees would volunteer their time and spend their own money to help the company out. He sees it as a sign of how committed they are to the company and its mission.

Maybe. The reality is they might not have any choice if they want to wipe their asses at work. Employees’ willingness to wash and even deliver cars on their own time would probably count for a lot when managers are deciding who to lay off. People need their pay checks.

On a more serious note, Tesla’s problems have a real impact on Musk’s net worth and his ability to put his personal wealth toward his goal of colonizing Mars. As of today, Tesla’s shares had sunk to $187.65, down from a high of $379.57 in August.

Seeking Alpha reports that Musk’s shares of the company are heavily leveraged:

That gets me to the proxy filing also issued on Friday. On page 72 of the document, there’s a listing of major holdings and their positions. Musk has the largest stake in the firm, 21.7% of shares, with the following note attached regarding his position:

Includes (“I”) 33,824,680 shares held of record by the Elon Musk Revocable Trust dated July 22, 2003; and (“II”) 4,748,110 shares issuable to Mr. Musk upon exercise of options exercisable within 60 days after December 31, 2018. Includes 13,394,056 shares pledged as collateral to secure certain personal indebtedness.

The shares pledged for personal indebtedness amount to 39.6 percent of those held by the revocable trust and 34.72 percent when the exercisable options are taken into account. The figures for 2010 were 17.51 percent and 15.87 percent, respectively.

Continued declines in Tesla’s stock would not only hurt the company but could result in expensive margin calls for Musk, who in December took out $61 million in new mortgages on five mansions he owns in California.

Musk also has a tendency to intertwine his company’s operations. For example, SpaceX purchased SolarCity bonds before the latter company was acquired by Tesla.

I have yet to see an analysis of how interconnected Tesla and SpaceX are, and what might happen if the electric car company went bankrupt. The financial details are obscure so it’s hard for anyone to get a good handle on it.