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February 13, 2022
November 16, 2021
Elon Musk is cashing in.
The Tesla CEO — who this weekend made waves with a Twitter poll asking his 61 million followers whether he should sell a chunk of his stake in the electric automaker — has sold nearly $5.7 billion worth of shares of his company over the past few days.
Musk’s sales of roughly 5.1 million Tesla shares have come in the form of planned and unplanned sales, according to U.S. Securities and Exchange Commission filings. Here’s why Musk did it, and what the move means for the world’s richest person and his company.
In 2012, Musk was awarded Tesla stock options that allowed him to buy 22.8 million shares at $6.24 per share. Those options expire next year, giving Musk a limited window to take advantage.
Tesla is trading at $1,047 per share, as of Friday morning — so exercising those options is a great deal for Musk. But when he does it, he’ll need to pay taxes on the difference between the 2012 and 2021 stock prices at a rate of more than 50%. This will leave him with a tax bill worth roughly $15 billion, according to calculations by CNBC’s Robert Frank.
So, to pay that tax bill, Musk needs to raise some cash. He’s done that by selling stock. The SEC filing detailing Monday’s sale of more than 930,000 shares listed the reason for the transaction as being “solely to satisfy [Musk’s] tax withholding obligations related to the exercise of stock options.”
Musk also sold 3.5 million shares on Wednesday, worth roughly $3.9 billion. That was an unscheduled sale, and may have been more related to Musk’s Twitter poll. The SEC filings disclosing Wednesday’s sale didn’t list a reason for it.
Similarly, he sold an additional 639,737 shares worth $687 million on Thursday.
The approximately 5.1 million shares Musk has sold this week represented more than 3% of his total stake. Now, his roughly 167 million remaining shares control around 20% of the company.
By Wednesday morning, Tesla shares were down more than 17% for the week — but the stock has rebounded around 3.5% since then. According to Wedbush analyst Dan Ives, Musk’s Twitter poll was a “lightning rod event” that spooked investors into expecting “a cascade impact” on Tesla shares.
Reports of Musk’s upcoming tax bill helped calm those investors, Ives tells CNBC Make It.
“Whether the Twitter poll said yes or no, he was going to have to sell the stock,” Ives says. “With that tax bill, investors recognized that a stock sale was going to come.”
Tesla shares are still having a very strong year. The company is up roughly 45% year to date, and recently became just the sixth company ever to reach a $1 trillion market cap.
Despite the volatility, Musk is still by far the richest person on earth. His net worth most recently clocked in at $294 billion, according to the Bloomberg Billionaires Index. Earlier this year, it was as high as $340 billion.
Since Jan. 1, Musk’s net worth has grown by $124 billion, a significant rise buoyed largely by Tesla’s sharp uptick in stock price this year.
For comparison’s sake, the world’s second-wealthiest person, Jeff Bezos, is currently worth $200 billion. Bill Gates, the world’s fourth-richest person, is worth $137 billion.
If Musk holds true to his promise to sell 10% of his Tesla stake, then yes. His target figure is 17 million shares, and he’ll need to sell roughly 11 million more of them to get there.
Ives says that Wedbush believes Musk will unload more shares in the coming days.
February 13, 2022
November 2, 2021
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