Elon Musk had the sale voted on Twitter, but apparently he’s going to have to sell anyway
Tesla boss Elon Musk will sell ten percent of his Tesla shares. At least if he follows the result of the Twitter vote he initiated. On Saturday night, Musk asked the results of his followers if they would agree if he sold a tenth of his shares.
The result was positive: almost 58 percent of the 3.5 million people who voted were in favor of the proposal. Musk (who recently traded as Lord Edge on Twitter) assured that he would follow the vote:
Musk had justified the proposed sale with the fact that the high, unrealized stock gains were often criticized – because unrealized stock market profits do not have to be taxed. Musk apparently wanted to give the action a charitable touch.
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However, a large number of stock options will mature over the next three months. To keep them from expiring, he has to buy Tesla shares. But that would entail a high tax burden – presumably because he received it at a reduced rate. According to Reuters, it could be that the proposed sale of shares is intended to finance this tax liability.
Musk owns approximately 170 million shares of Tesla, each of which is currently worth about $ 1,220. That would make the sale of 17 million shares about $ 20 billion. The price of the stock has roughly tripled in the past 12 months – it rose from $ 410 to $ 1,220. The sale of 100,000 Teslas to car rental company Hertz recently brought Tesla’s value to more than $ 1 trillion. In this respect, the moment is favorable for a sale.
Musk will also get significantly more Tesla shares again if he exercises his options. According to Reuters, Musk has options to buy nearly 23 million shares, so Elon Musk would have six million more shares even after selling 10 percent of his current holding.
In September Elon Musk said, after exercising the options, he would have to give more than half of the profits to the tax office. Since the options are $ 6.24 per share and the shares are now worth $ 1,220, he would make about $ 28 billion in profit on 23 million shares; half of that would be $ 14 billion.
Musk’s move appears to be related to the discussion of a Democratic bill that would tax billionaires’ stocks more heavily to prevent them from indefinitely postponing capital gains taxes.
Musk criticized this proposal with the words: "Eventually, they run out of other people’s money and then they come for you." (Eventually they run out of other people’s money and then they come to you.)
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