Tesla investors can happily welcome 2022 as Tesla CEO Elon Musk has just met his share sales target. According to the latest filings, the trading plan was closed on December 28.
Musk has sold another 934,000 shares or so, worth $1 billion in total, in his electric car business. The filings also specify that the target trading plan is accomplished, further reassuring the company’s shareholders.
Since November 2011, where the US government raised tax rates for the wealth, the billionaire has been selling his holdings to cover taxes. Because of Tesla stock’s boom over the past few years, Musk anticipates to pay over $11 billion in taxes this year.
In 2021 only, the EV firm’s stock price has soared by 54%. Ever since Musk announced his massive share sales plan, Tesla stock had plunged from $1,200 per share in early November to $899 last week. Nevertheless, after the business magnate finished selling the target shares, the stock price has quickly bounced back and closed at $1,088 on December 29.
When a CEO or founder starts to dump shares of their own company, it usually indicates that they have lost confidence and just want to generate cash by selling their stock. However, this theory does not apply to Tesla. In fact, Musk sold his firm’s stock to cover a huge tax bill and meanwhile has been exercising stock options. After selling shares for 2 consecutive months, Musk has surprisingly seen his holdings in Tesla increase from 170 million shares to 177 million shares.
Musk was granted Tesla options in 2012 through a compensation plan. Since then, the richest person in the world has exercised options on 1.6 million shares at only $6.24 per share, thereby leading to an increase in his holdings.
According to Rule 10b5-1 established by the U.S. Securities and Exchange Commission (SEC), company insiders (including CEOs) must specify when and how they will trade their stocks in advance to avoid accusations of insider trading. Ultimately, Musk has reached his target of selling 10% of his stake in Tesla.
Despite being requested to pay the highest personal income tax ever in the US history, Musk’s fortune was still boosted by $2.3 billion, among which $1.1 billion will be paid to the US government.
As Tesla’s two new factories will be put into operation in 2022 along with the higher-than-expected revenue for 2021 and stock sales episode, investors can finally breathe a sigh of relief and enjoy their New Year’s Eve.
(Photo credit: Flickr/Steve Jurvetson CC BY 2.0)