Another day, another billion dollars.
Or in the case of Elon Musk, $ 1.2 billion.
A statement Friday night shows that Musk sold another 1.2 million shares of Tesla on Friday, at an average price of $ 1,030 per share.
It brings its sales for the week to a total of 6.4 million shares, for a total of $ 6.9 billion.
However, this means only less than 4% of the shares you hold directly, or less than 3% if you include all the options you hold to buy additional shares.
One week ago, Musk posted a survey on Twitter asking if he should sell 10% of his stakes as a way to increase his tax liability, and 58% of respondents said Yes. Its stock sales this week pushed down the value of Tesla shares for shareholders – including for him, as he is by far the largest shareholder. Shares of Tesla (TSLA) ended the week lower by $ 189 per share, or 15.4%.
It is unlikely that the Twitter survey was the main motivation for the sale. Rather, he faces a tax bill that will be triggered by his need to exercise 22.9 million stock options before next August. That bill would be nearly $ 10 billion at current market prices.
If you do not exercise your options by then, they will expire and you will lose the right to buy each share for only $ 6.24. But when he does, the value of the shares at that time will be treated as normal income and he will have to pay a 40.8% federal tax rate. It is also possible that it owes state income tax to California, which has a maximum tax rate of 13.3%. Even though he moved to Texas, which has no state income tax, he acknowledged in a recent tweet that he will still owe considerable California state income taxes, based on the considerable time he still spends working in the state.
Musk exercised the first block of 2.2 million of these options, which is due to expire soon, on Monday, and then sold 934 million shares to pay the fees for that year. However, the shares he has sold since come from his direct holdings, most of which he owns from the company’s initial public offering in 2010. And Musk will only owe a 20% long-term capital gains tax. for the $ 5.8 billion in revenue from these stock sales, or about $ 1.2 billion.
Tesla is still the most valuable car manufacturer in the world, with a higher market capitalization than the 12 largest car manufacturers by volume. Last month it became only the sixth US company to reach a valuation of $ 1 trillion. Musk’s stake in the company decreased slightly with these sales, but for now it is still equal to a 23.7% stake in the company, down from the 24.3% it would have had without sales.