Tesla Chief Executive Elon Musk sold about $1.1 billion worth of shares to cover tax obligations on options exercise, the billionaire reported in filings on Wednesday. Musk exercised options to acquire nearly 2.2 million shares of Tesla and then sold about 934,000 shares — about 0.5% of his Tesla holdings. The move gives Musk cash to pay for the tax bill associated with the exercising of the options, given that his wealth, pegged by Forbes at $281.6 billion, is tied to his stake in Tesla. It also spares him the capital gains tax bill that he would have had to pay had he sold the shares without coupling their divestment with the exercising of the options.
The electric car maker’s stock rose 2% after the bell on the news, helping to offset a multiday sell-off that had endangered the company’s position in the $1 trillion club. Musk on Saturday polled Twitter users about selling 10% of his stake, setting off worries that such a sale could hurt Tesla’s share price. In Wednesday’s trading session Tesla recovered 4.3% to $1,067.95. By Monday, the poll garnered more than 3.5 million votes. “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock," Musk said on Saturday, adding that he does not take cash salary or bonus “from anywhere", and only has stock. US Senate Democrats have unveiled a proposal to tax billionaires’ stocks and other tradeable assets to help finance President Joe Biden’s social spending agenda and fill a loophole that has allowed them to defer capital gains taxes indefinitely.
Musk has criticised the proposal saying, “Eventually, they run out of other people’s money and then they come for you."
A week ago, Musk said on Twitter that he would sell $6 billion in Tesla stock and donate it to the United Nations’ World Food Program (WFP), provided the organization disclosed more information about how it spent its money. Tesla bull Gary Black, portfolio manager at The Future Fund, said that Musk’s potential stock sale would lead to “1-2 days of modest selling pressure," but said there would be solid institutional demand to snap up the shares at a discount.
Musk was responding to a CNN article which quoted the Executive Director for the UN World Food Programme, David Beasley as saying, “2% of Elon Musk’s wealth ($6 billion) will solve world hunger. Following the claim, Elon Musk challenged the United Nations official’s claim that 2% of his wealth could help solve world hunger. Musk was responding to comments by David Beasley, director of the UN’s World Food Programme, who repeated a call last week following an earlier tweet this month asking billionaires like Musk to “step up now, on a one-time basis." Beasley had specifically called for action from Musk and Amazon.com Inc. co-founder Jeff Bezos, reported Bloomberg. Musk and Bezos were also the top two men on the Bloomberg Billionaires Index. “Just $6 billion could keep 42 million people from dying," Beasley had said. Musk threw up a challenge: “If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it."
In its filing, Tesla said Musk sold shares on Monday to satisfy tax withholding obligations related to exercising stock options to purchase 2,154,572 shares at $6.24, a huge discount from Tesla’s closing share price of $1,068 the same day.
He then sold 934,091 share at prices ranging from $1,135 to $1,196.
While Tesla has lost close to $150 billion in market value this week, retail investors have been net buyers of the stock. Some 58% of Tesla trade orders on Fidelity’s brokerage website on Wednesday have been for purchases, rather than sales.
Retail investors made net purchases of $157 million on Monday and Tuesday, according to Vanda Research.
Tesla is now up more than 51% in 2021, thanks largely to an October rally that was fueled by an agreement to sell 100,000 vehicles to rental car company Hertz (HERTZ.UL). read more
“The company itself is on fire, with strong results," said Tim Ghriskey, a senior portfolio strategist at New York-based investment management firm Ingalls and Snyder. “That is not going to fade quickly."
Bullish sentiment returned to Tesla’s options on Wednesday, with about 1.1 calls traded for every put. Calls are typically used for bullish trades, while buying puts shows a bearish bias. read more
The company’s options accounted for about $109 billion in premium changing hands over the last two weeks, or about one in every three dollars traded in the U.S.-listed options market, according to a Reuters analysis of Trade Alert data.
(With input from Reuters and AP)
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Elon Musk Sells Off Tesla Stock After Twitter Poll Votes 'Yes' - News18
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