Or in the case of Elon Musk, $ 1.2 billion.
A filing on Friday night shows Musk sold another 1.2 million Tesla shares on Friday, at an average price of $ 1,030 a share.
It brings its sales for the week to a total of 6.4 million shares, for a total of $ 6.9 billion.
Still, that only equates to less than 4% of the shares you own directly, or less than 3% if you include all the options you have to buy additional shares.
A week ago, Musk posted a poll on Twitter asking if he should sell 10% of his stakes as a way to increase his tax liability, and 58% of those who responded said yes. His stock sales this week have lowered the value of Tesla shares for shareholders, including himself, as he is by far the largest shareholder. Tesla (TSLA)
shares ended the week down $ 189 per share, or 15.4%.
The Twitter poll was unlikely to be the main motivation for the sale. Rather, he faces a looming tax bill that will be triggered by his need to exercise 22.9 million options to buy shares before next August. That bill would be nearly $ 10 billion at current market prices.
If you do not exercise the options by then, they will expire and you will lose the right to buy each share for as little as $ 6.24. But when you do, the value of the stock at that time will be treated as normal income and you will have to pay a federal tax rate of 40.8%. You may also owe California state income taxes,
which has a maximum tax rate of 13.3%. Even though he has moved to Texas, which has no state income taxes, he admitted in a recent tweet that he still owes substantial California state income taxes
based on the considerable time you still spend working in the state.
Musk exercised the first block of 2.2 million of those options that would soon expire on Monday and then sold 934 million shares to pay taxes on that exercise. However, the shares he has since sold come from his direct holdings, most of which he owns since the company’s initial public offering in 2010. And Musk will only owe a long-term capital gains tax of 20%. on the $ 5.8 billion of proceeds from those stock sales, or about $ 1.2 billion.
Tesla remains the world’s most valuable automaker, with a market capitalization greater than that of the 12 largest automakers by volume. Last month it became the sixth US company to achieve a $ 1 trillion valuation. Musk’s stake in the company has declined slightly with these sales, but for now it remains equal to a 23.7% stake in the company, down from the 24.3% it would have had without the sales.
As of this week, Musk had not sold shares of the company since 2016. But other board members and top executives have been selling shares the entire time, including his brother Kimbal Musk, a Tesla board member, who sold $ 108. million in Tesla shares from a week ago, equivalent to about 15% of his shares in the company, just before his brother’s sales began to reduce the value of the shares.
Musk is the richest person in the world, with a net worth estimated by Bloomberg at $ 294 billion. The $ 6.9 billion he received from this week’s transactions was already included in that calculation, as the estimated value of stocks and options is a significant part of his net worth. His net worth has dropped this week as Tesla’s stock price has dropped.
Recent stock sales do not appreciably change Musk’s financial position. The $ 6.9 billion of sales would be like a typical American family selling roughly $ 2,900 worth of stock that it already owns. The most recent estimate from the Federal Reserve puts the median net worth of a home at $ 121,700.