SpaceX – the two-decade-old rocket company run by billionaire entrepreneur Elon Musk – approved a $1 billion loan that was backed by some of its stock — around the same time Musk was acquiring Twitter, now known as X, for $44 billion, the Wall Street Journal reported on Tuesday. Musk withdrew all of the money the same month that he took ownership of Twitter, according to the report, citing documents.
The loan is likely to stoke questions about the financial soundness of the deal, which has yet to close due to the ongoing litigation between Musk and Twitter. The lawsuit alleges that Twitter’s board misled shareholders about using artificial intelligence to police abusive behavior and other violations, which has already resulted in several layoffs at the company.
In a tweet, before the deadline for buying Twitter passed, Musk emphasized that he did not buy the social media company to make money. He called Twitter “the de facto town square of the internet” and said he wants to open source the site’s algorithm. He added that Twitter can’t become a “free-for-all hellscape” because free speech is essential to civilization.
Musk, who became Twitter’s CEO after ousting the previous chief executive, Parag Agrawal, has vowed to keep the site from becoming too censored and wants to add services like money transfers and ride-hailing on the platform. He also plans to boost revenue by allowing businesses to pay for advertising. However, he has made some controversial statements about fake accounts and other matters on Twitter, which may need to be clarified whether he is the right person to run the company.
Twitter’s stock price dropped after announcing the deal, and some analysts believe that Musk’s financial situation may have given him pause. He has arranged with banks to borrow against his company shares, including electric vehicle maker Tesla and privately held SpaceX, and has also lent money to other investors. As of March, he owns around 42% of the shares in SpaceX and has 79% of its voting power.
Musk texted many people about the Twitter deal, and the public release of many of those texts gives us insight into how the whole thing came together and fell apart. Jack Dorsey, Joe Rogan, Larry Ellison, and Jason Calacanis all supported the plan at one point or another. Still, things started to go downhill when Agrawal asked Musk to stop tweeting about the company. The whole thing ended with Agrawal being fired and the lawsuit that the company filed against Musk’s company. The suit is expected to be resolved in 2022.