As netizens voted, Tesla’s stock price fell. Those who are happy are netizens, and those who are sad are investors. Of course the happiest is Musk and his brother.
Is Musk really just paying taxes when he sells stocks? Maybe not necessarily.
Before throwing the 100 billion project, my younger brother “ran off”
On November 7, local time, Musk launched a poll on Twitter asking his 62.5 million followers whether he should sell 10% of Tesla’s stock.
Musk’s move is intended to respond to a US proposal for billionaire income tax. Previously, the US Congress had proposed to tax billionaires’ assets to help pay for President Biden’s social and climate change agenda.
According to the proposal, Musk may have to pay $50 billion in taxes in the next five years. And Musk responded: “I don’t get cash salary or bonus from anywhere, I only have stocks, so the only way for me to personally pay taxes is to sell stocks.” He also said that regardless of the outcome, he will “obey the voting results.” .
On the last trading day before he initiated the vote, Tesla’s stock price closed at $1222.09, with a total market value of $1.23 trillion. According to the approximately 170.5 million Tesla shares held by Musk, if according to Friday’s closing price, he sold 10% of the shares for approximately 17 million shares, worth nearly 21 billion U.S. dollars (approximately 134.3 billion yuan).
The world’s richest man is so willful, handing over 130 billion large transactions to millions of “happy” netizens. For every netizen who voted, this may be the only one-hundred-billion-level project he has participated in in his entire life.
In the end, after the voting ended, it was revealed that 58% of the 3.5 million Twitter users who participated in the vote expressed support for Musk to sell these stocks.
Here, it is necessary to insert a talk about Musk’s stock. He himself also talked about one thing, he has no salary or bonus at Tesla, but constantly unlocks stock options based on the achievement of phased goals.
Musk’s recent exercise of options comes from the huge rewards he received in 2021. These rewarded options will expire in August 2022, so he must exercise before that. The exercise of this type of contract will incur income tax, and usually the awardee will immediately dispose of some of the newly acquired shares to pay this tax. Earlier this year, Musk publicly stated that he might exercise the option incentives obtained in 2012 soon.
Therefore, he has to pay taxes when he exercises the options, and the high probability of paying taxes involves the disposal of stocks. To a certain extent, whether Musk sells part of the stock has nothing to do with the voting result. It’s just that he does it in a relatively transparent way.
On Monday and Tuesday two trading days after Musk initiated the vote, Tesla’s stock price fell continuously, once falling below $1,000. On the last Wednesday, Tesla’s stock price stopped falling and rebounded, and finally closed up 4.3%. The latest price was $1067.95. This week’s decline narrowed to less than 13%.
But on the last trading day before Musk initiated the vote, that is, on November 5, Musk’s younger brother Kimbal Musk has sold Tesla shares. The number of shares sold was 88,500 shares, sold through JP Morgan Chase, at an average price of $1229.91 per share, or about $109 million (approximately 700 million yuan). Excluding options, it is equivalent to about 15% of Kimbal’s shares.
Musk’s younger brother, who loves to wear cowboy hats, is the owner and chef of a restaurant, the CEO of Kitchen Restaurant Group, and Square RootsUrban Growers Inc. Co-founder of. Since April 2004, he has been a member of Tesla’s board of directors and is also a director of Space X.
This is the high-level cashing as the saying goes. Of course, this also includes Musk himself.
Musk recently sold about $5.1 billion worth of Tesla shares. According to a regulatory filing disclosed on Wednesday, Musk sold more than 4.5 million Tesla shares this week. One of the transactions occurred on Monday. Musk sold shares worth approximately $1.1 billion to pay for his stock option income tax in the form of the day. This transaction plan was confirmed in mid-September.
In addition, Musk sold another 3.59 million shares of Tesla, valued at approximately $4 billion. It is worth noting that the additional 3.59 million shares sold were traded on Tuesday and Wednesday respectively, and the declaration documents did not indicate that they were planned in advance.
This is the first time Musk has sold Tesla shares in the past five years. The last time Musk sold Tesla stock was in 2016, paying about $590 million in income taxes.
Selling stocks for tax purposes only? Too simple
In the vote, Musk plans to sell shares worth up to 22 billion US dollars, which must far exceed the income tax he needs to pay.
So why did Musk sell so many stocks? May wish to make some guesses here:
1. A few days ago, Musk was “forced” by the United Nations to donate US$6 billion, perhaps selling stocks to do good deeds.
Some UN officials publicly advertised Musk, saying that he, worth more than 300 billion US dollars, only needs to donate 2% of his personal net worth, or 6 billion US dollars, to solve the global hunger problem.
Musk responded publicly on Twitter, saying that as long as officials of the United Nations Food Program can explain in detail how US$6 billion will solve the problem of world hunger and be financially open, he is willing to sell stocks for donations, but the public must be able to see what the money is. How to spend it.
Later, David Beasley, director of the United Nations World Food Program, responded that they have a transparent and open financial system and a $6 billion plan to solve the hunger problem of 42 million people. He himself can meet with Musk to show it.
The discussion on “the United Nations forced to donate to Musk” is still going on.
2. Musk’s move is to “decently” raise money to repay debts. Yes, you heard that right, the world’s richest man is also debt-ridden.
Tesla short Michael Burry (the movie “Big Short” prototype) believes that Musk’s move is not to solve the world hunger problem or pay income tax, but to repay personal debts after realizing his shares. An SEC document attached to Burry shows that as of the end of June this year, Musk has pledged 88.3 million shares, accounting for 36% of his Tesla shares, as collateral for personal loans.
3. Musk’s move is for market value management. You heard it right. Musk may not want Tesla’s market value to be too high to please investors.
In August 2018, Musk first announced that Tesla would be privatized in early August, and then announced at the end of the month that Tesla had cancelled the privatization plan. In September, Musk even publicly smoked marijuana in the live broadcast room. A series of mysterious behaviors caused Tesla to evaporate tens of billions of dollars in market value, and he also lost his seat as chairman of Tesla.
This time, whether Musk’s vote is another market value management, only he knows.
4. The most whimsical thing is that maybe Musk is tired of staying on the earth and wants to go to space or live on the moon for a period of time. So, building a house in space also requires a lot of money.
The only certainty is that Musk is still that maverick, I don’t know when the whimsical “Iron Man” of Silicon Valley.