Finance

Elon Musk sells back for billion in Tesla shares

This is evident from two reports to the Securities and Exchange Commission (SEC). This committee is charged with supervising the American stock exchanges, similar to the Netherlands Authority for the Financial Markets.

Twitter poll

With the latest transaction, the counter now stands at more than 11 million shares, since Musk asked his followers via Twitter poll in early November whether he should sell 10 percent of his stake in Tesla. He promised in advance to follow the results. Nearly 58 percent answered yes.

The share sale has already yielded Musk 11.8 billion dollars (10.5 billion euros) in recent weeks. In total, Musk owns about 170 million shares in Tesla. So if he really keeps his word by reducing his stake by 10 percent, there are still 6 million shares to follow.

Redeem options

At the same time, Musk also bought nearly 2.2 million shares at a price of $6.42, while the current price is at $1004. This is possible because he has held millions of options since 2012, which he can exchange into shares until August 2022 at a price of $6.42. Musk must be crazy not to use this.

However, there were conditions attached to those options. For example, in ten years he had to significantly increase production and come up with new models. Critics thought those conditions were impossible, but the Tesla boss was firmly convinced that this was possible. He was right.

Tax assessment

The exact reason for the share sale remains a mystery. The fact is that Musk has to pay taxes just like any other American. One problem, however, is that he does not receive a salary and his capital consists largely of shares. So he cannot avoid selling part of it to settle his tax bill.

And that is very expensive in the case of Musk. Americans pay income tax on the paper profits on the options to be exercised. That is the stock price at the time of sale and the strike price of $6.42. Because this difference is very large, Musk has to pay no less than 54 percent tax on this.

New Millionaire Tax

Also involved is a plan by the Democrats in the US Senate for a ‘millionaire tax’. Under this proposal, extremely wealthy people also have to pay taxes on unrelated gains on their shareholdings as prices rise. Musk is strongly against that.

The fanatic twitterer has not yet commented on the sale. He did, however, tweet this morning that he is probably jokingly thinking about quitting his jobs and becoming a full-time influencer. In addition to Tesla, Musk is also CEO of space company SpaceX. His net worth is estimated by Forbes at $263 billion.

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