Daily Management Review

His Tesla Share Options Exercised By Elon Musk And Then Sold $1.1 Bln In Shares


His Tesla Share Options Exercised By Elon Musk And Then Sold $1.1 Bln In Shares
According to filings made by Tesla Chief Executive Elon Musk on Wednesday, the billionaire sold off shares worth about $1.1 billion so that he could address his tax obligations on an option exercise.
His options to purchase roughly 2.2 million Tesla shares were exercised by Musk and he later sold off about 934,000 shares or about 0.5 per cent of his total stake in Tesla.
Considering the fact that according to Forbes, the personal wealth of Musk is estimated to be about $281.6 billion, and is linked to his investment in Tesla, the latest action by the billionaire now provides him with funds for paying the tax obligation connected with exercising the options.
It also helps him to avoid the capital gains tax payment that he would have had to cough up if he had sold the shares without first exercising the options and without coupling their divestment.
The was a 2 per cent surge in the shares of Tesla after the bell on Wednesday following the announcement by Musk of exercising his options which helped the stock to offset a sell-off that was happening for a few days which had put under threat the $1 trillion valuation of the electric car maker.
Last Saturday, Musk had posted a poll for his followers on Twitter asking them to advise him on whether he should sell his 10 per cent of his shareholding, which triggered concerns that if the sale was conducted by him, it would hit the stock price of Tesla. Tesla rebounded 4.3 per cent to $1,067.95 in Wednesday's trading session.
Aimed at satisfying tax withholding responsibilities connected to his exercising stock options to acquire 2,154,572 shares for $6.24, Musk sold shares on Monday, according to the filing by Tesla. The share options price for Musk is a very large discount compared to the closing share price of $1,068 of Tesla on Monday.
After exercising his options of acquiring the shares at $6.2 a share, Musk then sold off 934,091 shares at a price range of between $1,135 and $1,196 a share.
So far this week, the selloff of Tesla’s stocks has cost the company about $150 billion of its market value even though the net buyers of the company’s stocks have been ordinary investors. On Wednesday, 58 per cent of Tesla trading orders on Fidelity's brokerage website was because of buying instead of selling.
According to Vanda Research, retail investors made net purchases of $157 million of Tesla shares on Monday and Tuesday.
So far in 2021, the stock value of tesla has already risen by 51 per cent, owing in large part to an October surge sparked by a deal to sell 100,000 vehicles to rental car provider Hertz. 
"The company itself is on fire, with strong results," said Tim Ghriskey, a senior portfolio strategist at New York-based investment management firm Ingalls and Snyder. "That is not going to fade quickly."