Having somewhat hinted at his actions over the weekend – given the tweet poll’s comments:
“much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.”
And almost 58% of the 3.5 million votes were cast in favor of a sale.
It is now clear that Elon Musk was indeed selling (though not 10% of his holdings) and was thus responsible for Tesla’s big tumble early this week after exercising his options and dumping some of the shares to cover his tax liability.
In fact, on Monday, Musk exercised his options which were struck at the extraordinarily low price of $6.24, receiving 2,154,572 shares…
The last time TSLA traded at $6.24 was Nov 2012…
He then sold a large number of them to cover his tax liability.
“The shares of common stock were sold solely to satisfy the reporting person’s tax withholding obligations related to the exercise of stock options to purchase 2,154,572 shares”
And as the following table shows, Musk was left with 1,220,481 shares from that options exercise.
Therefore he sold 934,081 shares (or 43.4% of the exercised options) – or around $1.1 billion.
Given the price levels from Form 4, the following chart shows when the sells were made. Thanks perhaps to the magic of ‘gamma’ manipulation, TSLA shares exploded higher during the first hour of trading as Musk’s 934k shares were dumped on ‘diamond hands’…
…and in the end, the selling pressure took TSLA stock down 16% in two days (one has to wonder just who or what was holding the stock up all day on Monday, only to let it all come crashing down on Tuesday after the sale was complete)…
It’s the billionaire’s first sale since 2016, when he last exercised stock options and liquidated some of his newly acquired shares to cover about $590 million of income taxes.
However, there is one awkward thing. It appears the whole premise of the poll was a lie since Musk has pre-arranged this sale on September 14th:
“AUTOMATICALLY EFFECTED PURSUANT TO A RULE 10B5-1 TRADING PLAN PREVIOUSLY ADOPTED ON SEPTEMBER 14, 2021”
The problem that TSLA shareholders have is two-fold – if a 934k lot sparks such a significant drop in the stock… and Musk has 170 million shares left…
What happens every year when Elizabeth Warren’s wealth tax comes due?
