Elon Musk Sold $5 Billion of Tesla Shares – Should You Be Concerned?

SpaceX Capsule Test, Cape Canaveral, USA - 19 Jan 2020
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Elon Musk sold approximately $5 billion in shares, according to Securities and Exchange Commission filings, a move that comes just a few days following his Twitter poll on whether he should sell 10% of them.

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Find: Tesla Loses $199 Billion In Two Days — Is Elon Musk To Blame?

Tesla CEO also has a $15 billion tax bill looming, as reported previously by GOBankingRates.

The stock, which took a huge hit this week, erasing $199 billion in the company’s value, was up 2.4% in pre-market trading.

Musk first exercised just over 2 million stock options on Nov. 8, that were valued at roughly $2.5 billion at the day’s close, paying around $13.4 million in exercise costs, The Wall Street Journal reports. He sold many of those shares the same day to cover tax withholding obligations. He then sold around 4.5 million shares in total over the three days, shrinking the size of his stockholdings in Tesla even after exercising the options, the WSJ reports.

Monday’s option exercise and sales were made under a so-called 10B5-1 plan, adopted on Sept. 14, 2021, and established by the reporting person for the purpose of an orderly sale of shares related to the exercises of options scheduled to expire in 2022, according to the SEC filing — two months before Musk’s Twitter poll.

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Musk was awarded options in 2012 as part of a compensation plan and because he doesn’t take a salary or cash bonus, his wealth comes from stock awards and the gains in Tesla’s share price.

The 2012 award was for 22.8 million shares at a strike price of $6.24 per share. Tesla shares closed at $1,222.09 on Friday, meaning his gain on the shares totals just under $28 billion.

Those options have since vested and will expire in August, according to The New York Times. Most stock grants allow executives to avoid paying taxes for years, and perhaps forever, as long as they don’t sell the shares they get from converting the options, but Musk has taken out big loans against his shares, allowing him to monetize shares without selling them, the NYT adds.

See: Tesla Loses $199 Billion In Two Days — Is Elon Musk To Blame?
Find: Musk Loses $50 Billion in Two Days Following Tesla Stock Drop — Could It Continue To Diminish?

Tesla lost $199 billion in value during its biggest back-to-back selloff since September 2020, following a string of bad headlines and tweets that pushed the stock to drop.

The stock closed down 11.99% on Nov. 9, on pace to be the largest of the year for the stock and comes after a fall of nearly 5% on Monday, tempering a mostly upward trend for the year, CNBC reports.

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Overall, Tesla shares are however up more than 47% in 2021, according to CNBC.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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