Elon Musk & His Brother Have Sold Over $5 Billion Of Tesla Shares In The Past Week

Update (2200ET): Just hours after the world’s richest person filed to show a 934,000 ($1.1 billion) share sale (on Monday) to cover tax liabilities on the exercise of over 2 million options, a second set of filings (here, here, and here) showed an ever more massive sale of another 3.6 million shares for an average price of about $1,070 in the following two days (or around $3.9 billion).

The interesting thing about the price action this week is that when the sale occurred (Monday and Wednesday), TSLA shares miraculously surged as the wave of Musk selling hit. And yet collapsed on Tuesday – which as far as the filings are concerned saw no Musk sales… 

Combined, the transactions this week represent about $5 billion, or 3%, of Musk’s overall stake. 

Elon still owns roughly 167 million Tesla shares.

This is only the third time Musk has sold Tesla stock since the company went public on the Nasdaq exchange in 2010—and it’s easily his biggest transaction. In July 2010, Musk sold slightly more than 1.4 million shares for $24 million, and in 2016, he sold another 2.7 million shares for about $593 million.

Elon’s huge sales of TSLA shares this week follow his brother Kimbal Musk – a Tesla board member – sold 15% of his stake on November 5th. That sale of 88,500 shares totalled $109 million.

This sale came days before Elon’s now infamous tweet about whether he should sell 10% of his own stake.

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As we detailed earlier, having somewhat hinted at his actions over the weekend – given the tweet poll’s comments:

“much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.”

And almost 58% of the 3.5 million votes were cast in favor of a sale.

It is now clear that Elon Musk was indeed selling (though not 10% of his holdings) and was thus responsible for Tesla’s big tumble early this week after exercising his options and dumping some of the shares to cover his tax liability.

In fact, on Monday, Musk exercised his options which were struck at the extraordinarily low price of $6.24, receiving 2,154,572 shares

The last time TSLA traded at $6.24 was Nov 2012…

He then sold a large number of them to cover his tax liability.

As per the Form 4:

“The shares of common stock were sold solely to satisfy the reporting person’s tax withholding obligations related to the exercise of stock options to purchase 2,154,572 shares”

And as the following table shows, Musk was left with 1,220,481 shares from that options exercise.

Therefore he sold 934,081 shares (or 43.4% of the exercised options) – or around $1.1 billion.

Given the price levels from Form 4, the following chart shows when the sells were made. Thanks perhaps to the magic of ‘gamma’ manipulation, TSLA shares exploded higher during the first hour of trading as Musk’s 934k shares were dumped on ‘diamond hands’…

and in the end, the selling pressure took TSLA stock down 16% in two days (one has to wonder just who or what was holding the stock up all day on Monday, only to let it all come crashing down on Tuesday after the sale was complete)…

It’s the billionaire’s first sale since 2016, when he last exercised stock options and liquidated some of his newly acquired shares to cover about $590 million of income taxes.

However, there is one awkward thing. It appears the whole premise of the poll was a lie since Musk has pre-arranged this sale on September 14th:

“AUTOMATICALLY EFFECTED PURSUANT TO A RULE 10B5-1 TRADING PLAN PREVIOUSLY ADOPTED ON SEPTEMBER 14, 2021”

The problem that TSLA shareholders have is two-fold – if a 934k lot sparks such a significant drop in the stock… and Musk has 170 million shares left…

What happens every year when Elizabeth Warren’s wealth tax comes due?