Elon Musk ends the week selling another $1.2 billion of Tesla shares

A filing late Friday shows that Musk sold another 1.2 million shares of Tesla stock on Friday, at an average price of $1,030 a share. It brings his sales for the week to a total of 6.4 million shares, for a grand total of $6.9 billion.

Still, that only amounts to less than 4% of the shares he holds directly, or less than 3% if you include all the options he owns to buy additional shares.

A week ago Musk posted a Twitter poll asking if he should sell 10% of his holdings as a way of increasing his tax liability, and 58% of those who responded said yes. His sales of stock this week have pushed down the value of Tesla shares for shareholders — including himself, since he is by far the largest shareholder. Tesla shares ended the week down $189 a share, or 15.4%.

It’s likely that the main motivation for the sale was because of a looming tax bill that will be triggered by his need to exercise 22.9 million options to purchase shares before next August. That bill would be nearly $10 billion at current market prices.

If he doesn’t exercise the options by then, they’ll expire and he’ll lose the right to buy each share for a mere $6.24. But when he does, the value of the shares at that time will be treated as normal income, and he’ll have to pay a 40.8% federal tax rate. It’s also possible he could owe state income tax to California, which has a top tax rate of 13.3%. Even though he has moved to Texas, which has no state income tax, he conceded in a recent tweet that he’ll still owe considerable California state income taxes based on the considerable time he still spends working in the state.

Musk exercised the first block of 2.2 million of those soon-to-expire options on Monday, and then sold 934 million shares in order to pay the taxes on that exercise. The shares he has sold since, however, have come from his direct holdings, most of which he has owned since the company’s 2010 initial public offering. And Musk will owe only a 20% long-term capital gain tax on the $5.8 billion from the proceeds of those stock sales, or roughly $1.2 billion.

Tesla is still the most valuable automaker in the world, with a market cap greater than that of the 12 largest automakers by volume. Last month it became only the sixth US company to reach a $1 trillion valuation. Musk’s stake in the company has declined slightly with these sales but for now it is still equal to a 23.7% stake in the company, down from from the 24.3% he would have held without the sales [CNN].

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