Tesla CEO Elon Musk sold another $906 million worth of Tesla stock on Monday, bringing him one step closer to his eventual sales target. But now, the big question is: What is his ultimate goal?
According to a poll conducted on Twitter by Musk in November, he plans to sell 10 percent of tesla stock. At the time, he held about 170 million shares, so theoretically he planned to sell about 17 million shares to make good on his promise on Twitter.
According to investment research firm InsiderScore/Verity, as of Tuesday morning, he had sold a total of 11.9 million shares of Tesla stock, involving 680 transactions totaling about $12.7 billion. With his 10 percent target, he could sell another 5 million shares, which would be more than $4.8 billion at Tesla's closing price of about $966 on Monday.
However, some analysts point out that there may be more in the end. Musk is doing two kinds of stock sales: one to pay taxes on exercise options, and the other to cash out directly.
The main reason Musk sold his shares was to pay taxes on the exercise of options that expire next summer. Tesla's stock price has soared over the past two years, making founder Musk the richest man in the world today. But Musk also no longer takes any salary from Tesla, instead, he is compensated through stock options.
Musk has a large number of vested interest stock options, and he has the right to buy Tesla for about $6 per share, which expire in 2022, so he must exercise those options or he will lose a large sum of money, and exercising the options will in turn trigger large federal government taxes. Wall Street has speculated that the applicable tax rate for the options mr. Musk exercises is about 50 percent.
Analysts point out that if all his shares sold from now on are related to taxes, then he will only have $4 billion to sell. However, if he also wants to continue cashing out to help finance SpaceX or other businesses, that number could be even higher. So, based on his 10 percent target, Musk could only sell another $5 billion in stocks by the end of the year. However, if he has other cash plans or needs, the number could be higher.
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