Elon Musk sold roughly $5 billion worth of Tesla shares this week — his first such sale since 2016 — just days after conducting a Twitter poll asking his fans if he should dispose of 10% of his stake in the electric carmaker.
According to filings with US securities regulators, Musk exercised options Monday and then sold nearly half of the 2.1 million shares he received, raising about $1.1 billion in cash to pay taxes relating to the transaction.
Musk then sold another 3.6 million shares of Tesla stock on Tuesday and Wednesday, according to additional filings. An an average price of some $1,071 per share, those sales were worth about $3.8 billion.
The motivation for Monday’s sale was “solely to satisfy [Musk’s] tax withholding obligations related to the exercise of stock options,” the filing said. The other filings did not disclose a particular reason for those sales.
The options Musk exercised were about 9% of those he needs to exercise before they expire in August 2022. But taking that 9% will result in a $1 billion federal tax bill, under the top federal income tax rate of 37%, with another 3.8% net investment tax on top of that.
While the need for Musk to sell shares to pay taxes had been known by investors, Tesla’s stock fell following the Twitter poll on concerns that he intended to offload more than had been expected. The share price also could have fallen Monday partly because of Musk’s sales of almost 1 million shares that took place that day.
Shares of Tesla rose 2.7% in after-hours trading Wednesday following the filings.
Musk owned 170.5 million Tesla shares outright before this week’s transactions, worth $182 billion based on Wednesday’s close. In total, he also now has unexercised options on 71.4 million shares, including 20.7 million due to expire next August.
He made a nifty $2.5 billion profit on the options he exercised this week, since he only had to pay $6.24 per share under the terms of the 2012 award. He then sold roughly 934,000 at an average price of $1,180 per share.
Most of Musk’s net worth of about $300 billion, as calculated by Bloomberg, is his Tesla shares and options to buy additional shares. Tesla became only the sixth company to ever be worth $1 trillion two weeks ago. But he is also the primary shareholder in privately held SpaceX.
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