- Elon Musk sold almost $US7 ($AU10) billion worth of Tesla stock this week.
- The Tesla CEO tweeted that he’s intentionally designed his sales to incur more taxes.
- If Musk sells 10% of his stock as expected, the disposals could continue for a couple more weeks.
Elon Musk cashed in nearly $US7 ($AU10) billion worth of Tesla stock this week, and indicated on Twitter that he’s intentionally incurring higher taxes on the sales.
The Tesla CEO sold about 6.4 million shares in five days, generating about $US6.9 ($AU9) billion, Securities and Exchange Commission filings show. The disposals fueled a 15% drop in the electric-vehicle company’s stock price this week, which wiped around $US180 ($AU245) billion off its market capitalization.
Musk has sold a lot more of his existing stock than his shares from newly exercised options, even though the shares he already held will be taxed at a higher rate.
“A careful observer would note that my (low basis) share sale rate significantly exceeds my 10b (high basis) option exercise rate, thus closer to tax maximization than minimization,” Musk tweeted on Thursday.
There are several competing theories around why Musk is selling stock. The executive noted months ago that he held stock options that expire in 2022, and that he planned to sell shares to cover the cost of exercising them and paying the resulting taxes.
However, the Tesla and SpaceX CEO launched a Twitter poll last weekend asking whether he should sell 10% of his stock, and vowed to abide by the result, which turned out to be positive. He cited pressure from lawmakers who are pursuing a “billionaire tax” as his motivation for the poll.
Meanwhile, Michael Burry of “The Big Short” fame suggested this week that Musk might need to sell stock to pay off personal debts, as the executive held loans against 88 million Tesla shares, as of June 30.
Musk still holds 166 million shares, or about 17% of Tesla’s outstanding shares. If he follows through on his commitment to sell about 17 million shares in total, and maintains his current rate of selling, his disposals might continue for a couple more weeks.