Elon Musk sells an additional $ 1 billion of Tesla shares, near 10% target

Tesla CEO Elon Musk stands in the foundry of the Tesla Gigafactory during a press event.

Patrick Pleul | image alliance | Getty Images

Tesla and SpaceX CEO Elon Musk sold an additional 934,090 shares, or about $ 1.02 billion of his holdings, in his electric and solar car business, according to financial documents released Tuesday night.

Musk also exercised options to purchase nearly 1.6 million Tesla shares at an exercise price of $ 6.24 per share, which were granted to him through a 2012 compensation package.

On exercising his options this quarter, Musk’s holdings in Tesla grew from around 170.5 million shares to over 177 million shares, the Wall Street Journal first reported.

Since November 8, Musk has been on a frenzy of selling, in part to pay his impending tax bills on these options.

The celebrity CEO polled his tens of millions of Twitter followers in the first week of November to ask if he should sell 10% of his stake in Tesla. They voted yes. But much of the sales that followed the entertaining Twitter poll were part of a plan Musk adopted in September of this year.

Under rules 10b5-1, company insiders (including CEOs) can trade their own shares as part of a pre-announced portfolio management plan. They should state in advance when and how they plan to trade to protect themselves from subsequent accusations of insider trading.

This year, Tesla shares have risen by more than 54%, making Musk the richest person in the world. His net worth now exceeds $ 275 billion, according to Forbes estimates.

This wealth comes from Musk’s stakes in Tesla and SpaceX. He currently does not receive a salary or cash bonus and had not sold a large number of Tesla shares until this year. Instead, he had taken out large loans against a portion of his Tesla shares.

Since taxpayers only pay taxes on income or stocks once they are sold, Musk has never paid a significant amount of tax each year relative to his net worth, ProPublica previously reported. .

Earlier this month, Senator Elizabeth Warren, D-Mass., Tweeted that Musk was “unloading from everyone”, since he did not pay federal income tax in 2018.

Today, Musk is expected to pay what will likely be the biggest individual tax bill in U.S. history, with federal and California income taxes estimated at over $ 11 billion. He will have to pay that tax bill in order to receive more than $ 23 billion in compensation, in the form of stock options that would otherwise expire in August.

The centibillionaire discussed his wealth and tax strategy in a series of press appearances in December, including interviews with the Financial Times and Time Magazine after the two outlets named him no of the year for 2021.

To cap off his year-end advertising efforts, Elon Musk spoke to conservative satirical site The Babylon Bee on Tuesday last week. During this interview, he said, “I have sold enough shares to reach about 10% plus option exercises and have tried to be extremely literal here.”

The next day on Twitter, Musk said, “This assumes the $ 10 billion sale has been completed.” And noted, “When the 10b pre-programmed sales are over. There are still a few installments left, but almost complete” in a subsequent tweet.

By some estimates, Musk still has over a million shares to sell to hit his 10% target in November of around 17 million shares. Tesla did not respond to a request for comment or more information on the total amount it plans to sell to meet that goal.

CNBC’s Thomas Franck and Robert Frank contributed reporting

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