Tesla CEO Musk sells around $5.7 billion worth of holdings in a week
• Musk tweeted that making life multi-planetary is the “main reason for accumulating capital”
• The move to sell Tesla holdings also comes as U.S. Senate Democrats proposed taxing the stock holdings of billionaires to help finance President Biden’s social spending plan
Tesla Inc chief executive Elon Musk has disclosed he sold around $5.7 billion worth of electric-car maker’s share, announced through a series of regulatory filings, days after his Twitter poll.
So far, the billionaire has sold a total of around 5.2 million Tesla shares from his personal and trust holdings.
What has happened so far?
Last weekend, the billionaire tweeted, “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” and asked his 63 million followers whether they should approve the move.
Around 58% of the 3.5 million followers who answered the poll voted for the share sale.
Three days after Tesla filed ten SEC filings and announced that between Monday and Tuesday, Musk’s trust sold nearly 3.6 million shares, worth around $4 billion, while the CEO sold another 934,000 shares for $1.1 billion.
On Monday, Musk exercised nearly 2.2 million stock options worth about $2.2 billion for roughly $13.4 million, and then he sold about 934,000 shares for just over $1.1 billion.
The filing said that about a fifth of the options-related sales was set up in September through a trading plan that allows corporate insiders to establish preplanned transactions on a schedule, long before Musk’s tweet about selling shares.
Again, Tesla on late Thursday said Musk sold nearly 640,000 shares held by his trust in multiple transactions for about $687 million.
Expected reason behind the move
While, Musk has not said how he will spend or invest the money he will pocket from the stock sales so far, which are taxable at capital gains rates, Tesla disclosed that the CEO would have to exercise more than 26 million stock options by August 2022, which would create a hefty tax bill.
At an appearance at the Code Conference in September, Musk said when his stock options expire at Tesla, his marginal tax rate would be over 50%.
It is estimated that selling some of his stock could free up funds to pay the taxes.
The move to sell his Tesla holdings also comes as U.S. Senate Democrats proposed taxing the stock holdings of billionaires to help finance President Joe Biden’s social spending plan.
Moreover, Musk, who is also the CEO of Space X, on Wednesday tweeted that making life multi-planetary is the “main reason for accumulating capital.”
The financials
Last month, Tesla crossed the $1 trillion market cap for the first time after car rental company Hertz said it had ordered 100,000 vehicles to electrify its rental-car fleet.
After Musk tweeted, the EV-maker shaved around $60 billion in market value last Monday, and shares slumped 12.7% since SEC filings and are currently trading at around $1,024.
Before the sale, Musk owned a combination of about 244 million shares through his trust and stock options as of the end of June, which translates to about 23% in Tesla. Among the total holdings, 170 million shares were held by his trust.
Forbes estimated that Musk, the world’s richest person, had a net worth of $304 billion on Monday and is currently at $270 billion.
Picture Credit: BBC
