Tesla CEO Elon Musk, who borrowed $517 million on margin to buy more stock, potentially would be forced to liquidate all his shares and risk bankrupting Tesla if the price falls by 20 percent.

Tesla, Inc. has lost money almost every quarter over the last 16 years. Yet, the company has been able to regularly raise large amounts of cash from investors, because Wall Street has argued that Tesla is a Silicon Valley technology stock, instead of a Midwest car company.

Despite the company reporting lower car sales, a bigger financial loss and risks that its Autopilot self-driving feature may have caused a March 1 car crash that decapitated the driver, Tesla sold $750 million of stock at a price of $243 a share to the public on May 1 in an underwritten transaction led by Goldman Sachs and others.

The Securities & Exchange Commission disclosure documents reveal that Elon Musk bought $10 million of stock in the last offering to help fund the company. That means that Musk now owns about 40 million of the 178 million Tesla shares outstanding, or about 23 percent.

To support funding the company and other personal investments over the last decade, Musk personally borrowed about $517 million on margin from Morgan Stanley, Goldman Sachs, and Bank of America by pledging his Tesla share holdings as collateral.

But with the stock trading in the after-market on May 22 at $190.65, the shares of Tesla stock have fallen by over 22 percent in the last three weeks. That means new shareholders have lost over $160 million in the last 15 trading days. 

Normally, Elon Musk could just borrow more money on margin to buy Tesla stock and push the price back up. But due to Musk having a series of problems with the Securities & Exchange Commission (SEC) about the validity of his optimistic tweets, coupled with a video surfacing of him brazenly smoking pot, Tesla’s Board restricted Musk to a 25 percent “loan to pledge” on his stock ownership.

As a result, another 20 percent decline in Tesla stock price to about $151.53, may cause Elon Musk’s lenders to start massive sales of Tesla’s stock to protect the principal of their margin loans. Such big sales could kick off a shareholder panic and cause the price to crash.

Morgan Stanley’s auto analyst Adam Jonas warned on Wednesday that the “bear case” for Tesla is a stock price of $10.

If the company continues losing hundreds of millions of dollars from operations each quarter and loses access to more cash through new stock offerings, Tesla could soon be in a condition Wall Street bankers refer to as “structurally bankrupt.”