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Elon Musk offloads nearly $5bn in Tesla shares

Tesla chief executive took to Twitter for poll on selling 10% of stock

Tesla chief excutive Elon Musk sold approximately $1.1 billion in shares of his electric car company, after indicating over the weekend he would sell 10 per cent of his stock based on the results of a Twitter poll. However the sell was put in motion on September 14th, according to documents filed on November 10th, 2021, meaning it was not spurred by the survey’s outcome. Photograph: Odd Andersen/AFP via Getty Images

Richard Waters
Thu Nov 11 2021 - 09:38

Elon Musk sold nearly $5 billion worth of his Tesla shares in the first three days of this week, shortly after promising he would cash in 10 per cent of his stake if Twitter users voted for him to make the sale.

The Tesla chief executive has been silent on the possible share sales since he announced in a tweet on Saturday that he would sell the 10 per cent holding, currently worth some $18 billion, if a Twitter poll backed the idea.

It was unclear whether the spate of transactions disclosed in regulatory filings after the market closed on Wednesday were the first instalment in making good on his promise but at least some of the disposals were planned well before his Twitter stunt.

Although Mr Musk attracted huge attention by appearing to leave it to the Twittersphere as to whether he sold shares, the regulatory filings showed that at least $1.1 billion of the sales were set in motion when he adopted a blind trading plan in September.

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The arrangement, known as a 10b5-1 plan, is often used by executives to avoid suspicions of insider trading and is frequently used to spread sales over a period of time. Filings covering subsequent sales made on Tuesday and Wednesday did not specify whether they had been made under the blind trading arrangement.

Mr Musk has said previously that he expected to sell a significant part of his Tesla stake to cover the taxes that will fall due on tens of billions of dollars worth of options that have to be exercised by next August.

The transactions disclosed on Monday showed Musk had exercised some options, bringing him stock worth about $2.3bn by the close of trading. He paid only $13.4 million for the shares underlying the options, which had an exercise price of $6.24, compared to Tesla’s Monday closing price of $1,162.94. The shares fell the following day but recovered to close up 4.3 per cent to $1,067.95 on Wednesday.

Mr Musk has said he expected to face a personal income tax rate of more than 50 per cent on the profits he made from exercising options, meaning he would have to sell more than half the stock acquired at the time of each option exercise to cover his tax bill.

The Tesla chief executive was silent on Saturday about the need to pay taxes on his expected options profits. Instead, he tweeted that he was throwing it open to Twitter users to decide if he should sell his shares since “much is made lately of unrealised gains being a form of tax avoidance”. – Copyright The Financial Times Limited 2021

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