Elon Musk traded another $1.2 billion worth of Tesla stock this week

Key Takeaways:

Another billion dollars, another day.
In the case of Elon Musk, $1.2 billion.
Musk sold another 1.2 million shares of Tesla stock on Friday, at an average price of $1,030 for share, according to a filing filed late Friday.

This takes his total sales for the week to 6.4 million shares, totaling $6.9 billion. Even yet, that only accounts for less than 4% of the shares he owns directly and less than 3% when all of his options to buy further shares are considered. Musk asked a Twitter poll a week ago to see if he should sell 10% of his shares to reduce his tax bill, and % of people who responded voted yes.

Because he is by far the largest shareholder, his stock transactions this week have lowered the value of Tesla shares for shareholders, including himself. As a result, Tesla’s (TSLA) shares were down $189 a share, or 15.4 % at the end of the week.

It’s unlikely that the sale was primarily motivated by a Twitter poll. Instead, he faces a significant tax liability due to his requirement to exercise 22.9 million options to purchase shares by August of next year.

At current market levels, the bill would be about $10 billion. If he does not exercise his options before then, they will expire, and he will lose the ability to purchase each share for $6.24. When he does, however, the value of the shares will be classified as regular income, and he will be subject to a federal tax rate of 40.8 %.

It’s also probable that he owes California state income tax, which has a top rate of 13.3 %. Even though he has gone to Texas, which has no state income tax. Elon recently admitted in a tweet that he will still owe huge California state income taxes due to the amount of time Elon spends working in the state.

On Monday, Musk exercised the first block of 2.2 million of those soon-to-expire options, then sold 934 million shares to cover the tax bill. As a result, musk’s ownership in the company has decreased marginally due to the sales, but it remains at 23.7 %, down from the 24.3% he would have owned if the sales had not occurred.

Source: CNN News