Or in Elon Musk’s case, $1.2 billion.
A submitting late Friday reveals that Musk bought one other 1.2 million shares of Tesla inventory on Friday, at a median value of $1,030 a share.
It brings his sales for the week to a complete of 6.4 million shares, for a grand whole of $6.9 billion.
Nonetheless, that solely quantities to lower than 4% of the shares he holds straight, or lower than 3% when you embrace all of the choices he owns to purchase extra shares.
Every week in the past Musk posted a Twitter poll asking if he ought to promote 10% of his holdings as a means of accelerating his tax legal responsibility, and 58% of those that responded said yes. His gross sales of inventory this week have pushed down the value of Tesla shares for shareholders — together with himself, since he’s by far the biggest shareholder. Tesla (TSLA) shares ended the week down $189 a share, or 15.4%.
It is unlikely that the Twitter ballot was the primary motivation for the sale. Slightly, he faces a looming tax bill that might be triggered by his have to train 22.9 million choices to buy shares earlier than subsequent August. That invoice could be almost $10 billion at present market costs.
If he does not train the choices by then, they will expire and he’ll lose the correct to purchase every share for a mere $6.24. However when he does, the worth of the shares at the moment might be handled as regular revenue, and he’ll need to pay a 40.8% federal tax fee. It is also doable he might owe state revenue tax to California, which has a prime tax fee of 13.3%. Regardless that he has moved to Texas, which has no state revenue tax, he conceded in a latest tweet that he’ll nonetheless owe considerable California state income taxes primarily based on the appreciable time he nonetheless spends working within the state.
Musk exercised the primary block of two.2 million of these soon-to-expire choices on Monday, after which bought 934 million shares so as to pay the taxes on that train. The shares he has bought since, nevertheless, have come from his direct holdings, most of which he has owned because the firm’s 2010 initial public offering. And Musk will owe solely a 20% long-term capital achieve tax on the $5.8 billion from the proceeds of these inventory gross sales, or roughly $1.2 billion.
Tesla remains to be essentially the most precious automaker on the planet, with a market cap larger than that of the 12 largest automakers by quantity. Final month it grew to become solely the sixth US firm to succeed in a $1 trillion valuation. Musk’s stake within the firm has declined barely with these gross sales however for now it’s nonetheless equal to a 23.7% stake within the firm, down from from the 24.3% he would have held with out the gross sales.
Till this week, Musk had not bought any shares of firm’s inventory since 2016. However different board members and prime executives have been promoting inventory all alongside, together with his brother Kimbal Musk, a Tesla board member, who bought $108 millon value of Tesla shares per week in the past, equal to about 15% of his shares within the firm, simply earlier than his brother’s gross sales began pushing down the worth of the inventory.
Musk is the world’s wealthiest person, with a internet value estimated by Bloomberg at $294 billion. The $6.9 billion he acquired from this week’s transactions was already included in that calculation, because the estimated worth of the shares and choices is a big a part of his internet value. His internet value has fallen this week as the value of Tesla shares have declined.
The latest inventory gross sales do not appreciably change Musk’s monetary place. The $6.9 billion from gross sales could be like a typical American household promoting about $2,900 value of shares it already owned. The Federal Reserve’s most up-to-date estimate places the median family internet value at $121,700.
