Image Source: (CNBC)
Eli Richardson
November 14, 2021
Over the past week, Elon Musk has sold Tesla stock worth approximately $6.9 billion, one of the largest disposals by a chief executive ever. This comes off the back of a tweet Elon Musk sent out on November 6th, 2021 where he pledged to sell 10% of his shares. Currently, Elon Musk would need to see around 10 million more shares to meet that percentage.
Tesla shares were impacted by the sale, falling 2.83% to $1,033.42 last Friday with an overall decline of around 15% since he published the Twitter poll.
Elon Musk also exercised 2 million stock options this week and still has around 20 million options at a price of $6.24 a share that he may exercise before the expiration date of August 2022. The difference between the option price and the share price when exercised will be taxable income and the sale of stock could go a long way in funding the inevitable massive tax hit.
The option exercise and sales are all in accordance with a trading plan filed and established last September. This plan, called a 10b5-1 allows executives to sell based on a schedule and other factors without running the risk of violating insider trading rules.
In reality, the sale of Elon Musk's Tesla stock and exercise of options has long been planned and is not as a result of the continuing debate over how the wealthiest Americans are taxed like Elon Musk's Twitter poll has been stated.
It will be interesting to continue to follow the situation and if there is volatility in Tesla as a result of these sales. The next date to watch will be 2028, the next time Elon Musk has a large number of options to exercise.
Source: (The Wall Street Journal)