After promise, Elon Musk sells USD 1.1 billion in Tesla shares to pay taxes

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Image Source: AP (FILE)

Tesla CEO Elon Musk

After making the promise on Twitter, Tesla CEO Elon Musk sold about 900,000 shares of the electric car maker, raising more than $ 1.1 billion, which will go towards tax liabilities on stock options.

The sale, disclosed in two regulations late Wednesday, will cover the tax liability on stock options granted to Musk in September. He exercised options to buy just over 2.1 million shares at $ 6.24 each. The company’s shares closed on Wednesday at $ 1,067.95 per share.

According to forms filed with the US Securities and Exchange Commission, the transactions were “automatically executed” as part of a September 14 trading plan to sell options that will expire next year. It was almost two months before he posted the sale idea on Twitter.

After the deals, Musk still owns about 170 million Tesla shares. Musk was Tesla’s largest shareholder as of June, according to data provider FactSet, with around 17% of the company. According to Forbes, he is the richest man in the world, with a fortune of about $ 282 billion, most of which comes from Tesla stock.

Musk said over the weekend that he would sell 10 percent of his shares in the company for more than $ 20 billion, based on a poll he conducted on Twitter. Selling reports triggered a sell-off in shares on Monday and Tuesday, but they recovered slightly on Wednesday. The stock rose 2.6% to $ 1,096 in extended trading on Wednesday, and is up more than 50% this year.

Wedbush analyst Daniel Ives said Musk will start selling shares at the end of the year. “The question for investors will be whether he will sell his entire 10 percent ownership in the coming months or will it be done in stages during 2022,” Ives wrote in a note to investors.

Ives calculated that Musk must pay about $ 10 billion in taxes on stock options that will be transferred next summer.

The sometimes harsh and unpredictable Musk said he offered to sell shares, as some Democrats insist that billionaires pay taxes when the price of their shares rises, even if they don’t sell any shares. However, the unrealized profits statement, also called the “tax on billionaires,” has been removed from President Joe Biden’s budget, which is still under negotiation.

“A lot has been done lately out of unrealized profits as a tax evasion tool, so I propose to sell 10 percent of my Tesla shares,” he tweeted Saturday afternoon. “Do you support this?”

Tesla is not paying Musk a cash salary, but it has received huge stock options. “I only have stocks, so the only way for me personally to pay taxes is to sell stocks,” Musk tweeted.

Tesla is based in Palo Alto, California, although Musk has announced that he will move his headquarters to Texas.

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