What is the real reason for Elon Musk to sell Tesla shares?
Yesterday, Elon Musk asked Twitter users to decide whether he should sell more than $20bn worth of his Tesla shares and pay tax.
The Tesla CEO said he would "abide by the results of this poll, whichever way it goes".
And the final result is "Yes" ![]()
![]()
But wait, why did he want to sell Tesla shares ![]()
![]()
There are two obvious reasons![]()
![]()
1. He needs money![]()
![]()
Musk doesn't accept a cash salary from Tesla. His compensation package entitles him to stock awards.
Musk was awarded options in 2012 as part of a compensation plan. The 2012 award was for 22.8 million shares at a strike price of $6.24 per share. Tesla shares closed at $1,222.09 on Friday, meaning his gain on the shares totals just under $28 billion.
The options expire in August of next year. Yet in order to exercise them, Musk has to pay the income tax on the gain. The total tax bill on his options, at the current price, would be $15 billion.
Therefore, Musk has to sell Tesla shares to make money.
2. Tax rates may increase![]()
![]()
If Musk were to sell stock, now could be a good time.
The current top tax rate on long-term capital gains is 23.8%, but Congress has been considering raising it. Changes in capital-gains tax rates often take effect immediately, to prevent gamesmanship.
Musk previously blasted a proposed tax on billionaires that would have subjected some holdings of about 700 Americans to annual capital-gains taxes on increases in value.
Will Tesla's share price fall?
- On the FTX crypto exchange Sunday afternoon, Tesla tokens have traded for $1,127, or 7.8% below where the real stock closed on Nov. 5. ![]()
![]()
- Musk's brother Kimbal Musk on Friday sold 88,500 Tesla shares, becoming the latest board member to offload a large number of Tesla stocks which hit record highs.![]()
![]()
- Since CEOs have limited windows in which to sell stock, and Musk would likely want to stagger the sales over at least two quarters, analysts and tax experts have been expecting Musk to start selling in the fourth quarter of 2021.![]()
![]()
Will Tesla's share price fall?? ![]()
![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
letsgetmoney : I believe that if Mr. Musk sell shares to pay taxes his stock (might) fall,but believe Me ,TELSA stock I don't believe has reached its peak with SpaceX , EV's & brains on end Musk,Telsa will b alright.
搞经济 抄底 加仓 : The sell off has started.. Let's Hold the line
知道賣股票的才是師傅 : Take profit and run revisit again in 3 months time
mark01bravz : well there's 2 sides of the camp. on 1 side there are those whom panic sell after the news. the other side would be people like me who are cash ready to load more and believe in the long term aspect of Tesla.
10bagger moo : Wah lau. Discount shopping lah.
Incentivise : He wants to buy AMC stock.
Mark Swanson : Elon needs to sell all his share and buy all the Shibs that we will let him
stonks 30000 Adam_Bomb:
Sylver : he is buying more doge lol
dragon king slayer : buy the dip I'm ready
View more comments...