Tesla CEO Elon Musk has been on a sales spree of late. Elon Musk sold another 934,091 shares of the electric vehicle manufacturing company, according to regulatory filings seen on Thursday. Shares worth $1.01 billion were sold to meet its tax obligations in connection with the exercise of options to hold 2.15 million shares.
From 8 November, the Chief Executive Officer of Tesla, which also owns SpaceX, has sold shares worth $10.9 billion. This equates to a total of 10.1 million shares.
Why is Elon Musk selling Tesla shares?
In early November, the world’s richest man tweeted that he would sell 10 percent of his stock if the social media platform’s users approved. Most of them had agreed to the sale on Twitter after which they sold the shares. However, according to a report in the Wall Street Journal, Musk was facing a S3.5 billion tax bill on his options at the time. It would have been more if Tesla stock hadn’t fallen after the Twitter poll — which actually saved him $480 million.
Having a tax evasion instrument has happened a lot lately, so I propose to sell 10% of my Tesla stock. do you support it?
— Elon Musk (@elonmusk) November 6, 2021
According to Reuters, after a flurry of options exercises, Musk still has the option to buy about 10 million more shares at $6.24 each. Musk’s option expires in August next year, which is why he has gone on a selling spree.
Tesla’s shares, however, fell after Musk’s Twitter poll, capturing a $1 trillion market cap to become the most valuable carmaker in the world. Tesla shares were selling at $1,084 per piece on Friday.
However, Elon Musk was awarded a Tesla stock option in 2012. This allowed him to purchase 22.8 million shares at $6.24 each. But this offer is going to end next year. The Tesla CEO, who has revealed that he is not paid cash in the company and only holds stock, now has a limited amount of time to make money from his shares.
Tesla’s stock market price on Friday indicated that Elon Musk is likely to make a good profit from the deal. However, this means that they will have to pay tax at the rate of 50 per cent from 2012 to 2021. It would be in the billions, but still a profitable option for the Tesla CEO.
Is Elon Musk still the richest man in the world?
Musk’s 2021 stock sale spree comes five years after he last sold shares in 2016. According to a BBC report, at the time he sold the shares to cover an income tax bill of $600 million.
Despite all this, according to the Forbes Billionaire Index, Musk’s net worth stood at $283 billion as of Friday. Earlier this year, it crossed the $384 billion mark, making him richer than Amazon’s Jeff Bezos, who is the second richest man in the world. Musk is still the richest man in the world.
If Musk follows through on his promise in a Twitter poll, he’ll have to sell about 17 million shares. This means they will have to say goodbye to another 10 million shares to meet their target.
In addition to Tesla, Musk earlier this year added $10.6 billion to SpaceX, the rocket company he founded in 2002. SpaceX’s valuation recently soared to $100 billion, making it the second most valuable private company in the world, according to the report. This huge valuation is the result of recent agreements with new and existing investors from insiders to sell up to $755 million in stock at $560 per share.
(with inputs from Reuters)
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