By
Svetlana Soroka
April 18th, 2024
Elon Musk said he sold a further sizable stake of his Tesla shares to offset a massive $11 billion tax bill.
According to an SEC filing, Tesla Inc (NASDAQ: TSLA) chief executive officer Elon Musk has offloaded an additional 934,090 shares worth $1.02 billion. The offloaded stock comprises the billionaire’s stake in his electric vehicle car company as well as his solar business.
Furthermore, Musk also exercised options to buy approximately 1.6 million Tesla shares at a strike price of $6.24 per share. This was made available to him through a compensation package a little over nine years ago. The Tesla CEO exercising his options this quarter sees his Tesla stake surge from 170.5 million shares to over 177 million shares. This is according to a report from the Wall Street Journal.
Elon Musk Has Been Selling Tesla Shares Since Early November
Musk has been offloading shares since the second week in November, after polling his countless Twitter followers. This is in part to fulfill his incoming tax obligations on those options. Musk is facing arguably the largest single individual tax bill in US history – about $11 billion in federal and California income taxes. Paying this tax bill will earn him a compensation of over $23 billion. This would take the form of stock options set to expire in August.
The billionaire earlier asked if he should sell 10% of his Tesla stake, to which an overwhelming Twitter majority voted yes. However, a huge chunk of the succeeding stock sales had nothing to do with the Twitter session. Rather, it was part of an earlier plan adopted by Musk in September.
According to the SEC’s Rule 10b5-1, corporate insiders – CEOs can trade their own equity pursuant to certain stipulations. This also includes a pre-announced portfolio management plan. However, these insiders have to declare the details of their planned trading executions in advance. This is to avoid later insider trading accusations.
Tesla’s 2022 Projections
Tesla is in a solid position going into the new year. According to Wedbush analyst Daniel Ives, the EV company’s shares have an almost 30% upside over the next 12 months. Part of this is attributed to surging demand from China and new factory establishments in the US and Germany. Ives stated that he expected component shortages to ease next year, allowing Tesla to better accommodate growing Chinese demand. As he put it:
“The linchpin to the overall bull thesis on Tesla remains China, which we estimate will represent 40% of deliveries for the EV maker in 2022.”
Ives also estimates that Tesla will double its current output by the end of next year. At the moment, the EV maker has a production capacity of 1 million cars. He noted that the company is in the peculiar situation of trying to meet growing demand. In his own words:
“Right now Tesla has a high-class problem of demand outstripping supply.”
Tesla stock rose more than 54% this year alone, propelling the EV company to market value surpassing $1 trillion. In addition, it was also a major catalyst for Musk becoming the world’s richest individual. According to Forbes estimates, his fortune now stands at more than $275 billion. Musk reportedly does not take any salary or cash bonuses from his two major companies – Tesla and SpaceX. Also, until this year, the outspoken businessman had not sold a large number of Tesla shares. Prior to this juncture, the most he did was incur substantial loans against a portion of his Tesla stake.