News & Politics

George Soros Drops a Cool $35 Million into Tesla

Tesla Motors Chairman, CEO and product architect Elon Musk, right, and chief designer Franz Von Holzhausen, left, drive the prototype Tesla Model S all-electric 5-door sedan after its unveiling Hawthorne, Calif. The City Council in Downey Calif. (AP Photo/Reed Saxon,File)

When you hear about this guy and stakeholding, the image you might conjure is someone else holding the stake. Over the coffin where he sleeps during daylight hours. But in the case of Tesla, it’s now George Soros holding the stake rather than slumbering below it.

That’s right. Soros, or at least his investment firm, is now a bondholder in Tesla Inc., the Elon Musk company theoretically dedicated to building the future.

Of Musk’s many adventurous forays into futurism, Tesla is the most prosaically capitalist among them. It’s a car company. That’s the business. Soros Fund Management LLC dropped a cool $35 million into the company’s convertible bonds, the adjective referring not to the cars but to the type of securities purchase being made.

Trevor Hunnicutt from Reuters has the story.:

Convertibles are hybrid securities, either bonds or preferred stock, that can be exchanged for a predetermined number of common shares. That effectively lets an investor participate in stock-price changes, but with the yield and greater security of a fixed-income instrument.

Reuters adds that Musk has been under the gun to “prove the company can solve production problems, stem senior staff departures and resolve questions about crashes involving its electric cars.” We’ve all seen the news of those crashes and Musk’s characteristically awkward attempts to discuss them on social media and elsewhere.

This has been a building situation for the company and for Musk. Reuters adds:

At the end of March, the Tesla bonds came under severe selling pressure as the luxury automaker faced concerns about its ability to produce its cheaper Model 3 sedan. A crash involving Tesla’s autopilot technology and concerns about the company’s ability to raise new capital also took a toll.

On Monday, Musk told employees the company was undergoing a “thorough reorganization.”

It’s not the first time Soros and Musk have joined together. In 2016, Soros’ investment firm loaned solar panel producer SolarCity a huge chunk of change in a sort of private bailout. And George himself previously owned stock in the company, which he dumped last year.

The convertible bonds they purchased this week are due in March of 2019, reports Hunnicutt.

These two billionaires are pretty different in their public personas, but creatures of the left politically for sure. When they first joined forces in 2016, a tweet since lost to time referred to it as the alliance of two Bond villains. Perhaps an exaggeration, at least as far as Musk goes.

It’s newsworthy and noteworthy, but whether this major monetary move is 007-worthy remains to be seen.

Then again, Musk does plan to use outer space to kill people, so…

I’m just saying.