Elon Musk avoids forced liquidation on his Tesla stock holdings primarily because his personal loans—secured by pledged Tesla shares—maintain an extremely low loan-to-value (LTV) ratio. This creates a massive buffer against stock price declines.
Key Details on Loan Structure
Tesla’s board policy caps the amount Musk can borrow against his shares at around $3.5 billion. As of recent filings (through late 2025), he had pledged approximately 236–238 million shares, valued at $80–100 billion or more depending on the stock price. This results in an LTV of roughly 4–5% (or lower), far below typical margin loan thresholds that might trigger calls (often 20–50% LTV in more aggressive setups).
With such a conservative structure, Tesla’s stock price would need to collapse by 95%+ from pledged values to even approach risking a margin call or forced sale by lenders. Historical drops, like the over 50% decline in early 2025, did not come close to triggering issues, as multiple analyses debunked margin call speculation at the time.
Historical Context and Risk Management
Earlier risks arose in 2022 during the Twitter (now X) acquisition, where initial plans included a potential $12.5 billion margin loan at a higher ~20% LTV, which could have been vulnerable to smaller drops. Musk restructured the deal, abandoning that loan, selling Tesla shares outright instead, and using other financing to eliminate the higher-risk exposure.
Additional Factors
Musk has occasionally sold Tesla shares voluntarily (e.g., for taxes or liquidity), but these are not forced liquidations. Tesla’s SEC filings note the theoretical risk of forced sales if loans default, but the low borrowing limit makes this highly unlikely under normal market conditions.
In short, the combination of board-imposed borrowing caps and conservative loan terms provides enormous downside protection, preventing the kind of rapid liquidation spirals seen in traditional high-leverage margin accounts.