Elon Musk has sold $5 billion worth of Tesla shares. This was his first such sale since 2016. According to data filed with U.S. securities regulators, Musk used options on Monday and sold nearly half of the 2.1 million shares he received. This raised about $1.1 billion in cash to pay for transaction-related taxes.
Musk then sold another 3.6 million shares to Tesla on Tuesday and Wednesday, according to additional documentation. The average price was $1,082 per share, about $3.9 billion. Sales reached a slightly higher average price, $1,180 per share.
Monday’s sale was motivated only by meeting Elon’s tax liabilities. The documents do not specify the specific reason for the sales. Musk used about 9% of the options he had to implement before the August 2022 deadline. Receiving 9%, however, would result in a federal tax of $1 billion; Within 37% of the highest national income tax rate, 3.8%. While this move and intention were known to investors, Tesla shares fell after a Twitter poll.
If Musk is going to sell 10% of his stake, we should still expect additional sales. Because at this time, only 2.6% of the shares have been sold by Elon. When Musk usage further options that cease, he will have to announce the amount of the stocks as usual income, with a 40.3% state tax and a federal tax estimate. The exact tax on the value of the shares is determined when the options are executed. However, the federal tax is expected to be $11 billion if the claims remain close to their current value.
Meaning of Tesla Stocks Selling
Musk has owned approximately 80% of the portfolio shares since its initial public offering in 2010. This is a stake that was mainly based on his investments in the company before it became public.
All the money he generated for the 3.6 million shares will be credited with long-term capital gains and taxed at 20%. This will result in an additional federal tax return of approximately $776 million. Elon could have avoided this capital gain by continuing to own these shares. This would only be possible by selling the claims he had acquired by exercising the options up to this time and in August.
Musk owned 170.5 million shares of Tesla before the transaction. That was $182 billion at the close of Wednesday. In addition, it has new options for 71.4 million shares, which expire next August. Musk’s fortune is currently about $300 billion.
Musk will make $5 billion by selling options and selling shares. Most of Elon’s assets are Tesla shares. It is noteworthy that two weeks ago, Tesla became the sixth company with a value of $1 trillion.