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Elon Musk sells $1.1 billion worth of Tesla stock

Tesla CEO Elon Musk on Wednesday sold about 900,000 shares of the electric carmaker’s stock, netting over $1.1 billion (€960 million), to pay tax obligations for stock options. Earlier in the week, his trust sold nearly 3.6 million shares in Tesla, worth around $4 billion,

He conducted a poll on Twitter asking users whether he should sell 10% of his stocks, saying he would follow the results of the poll. Following the survey, Tesla’s share price plunged Monday, meaning the 50-year-old Musk sold his stock at a lower price than if he had sold it before his tweet, losing tens of millions of dollars in unrealized profit.

Musk still owns 170 million Tesla shares after the transactions.

The whole situation is strange since Musk presented the idea as a way to counter criticism that the rich don’t pay taxes because they live off of loans against their stocks.

However, amid the Twitter poll, the CEO didn’t discuss the fact that he was about to exercise a lot of stock options he was awarded through his previous CEO grant.

Those options were about to expire and he is going to have to pay taxes on them, which makes the whole situation murkier.

Today, Tesla issued a new SEC filing confirming that he exercised 2.15 million options at a price of $6.24 per share on November 8.

At today’s TSLA price, that’s worth about $2.3 billion.

The CEO then sold 934,000 shares between $1,135.05 and $1,175.654 a share for about $1.1 billion.

In the filing, Tesla wrote that the sale of shares was “solely” to pay taxes on the options being exercised:

“The shares of common stock were sold solely to satisfy the reporting person’s tax withholding obligations related to the exercise of stock options to purchase 2,154,572 shares as reported herein.”

In the past, Musk had taken out loans in order to pay his tax obligations on stock options, but with Tesla’s recent surge in stock price, the value of his stock options is reaching a whole new level that would require him to take out massive loans.

As we previously reported over the last week, Musk wasn’t clear how exercising these stock options play into his “selling of 10% of his stake” in Tesla.

With this series of transactions, his stake in Tesla has actually increased.

This was going to happen regardless of the Twitter poll situation.

Honestly, this whole Twitter poll thing seemed to be a way for Musk to prime people about selling Tesla stocks, which was inevitable, without creating a frenzy.

I would expect more filings before the end of the week.

 

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