Insider Observations – Elon Musk & Tesla

It was the week of the split (wait for our US weekly highlights on Thursday). Today we share some insights about Elon Musk’s plans to part with some of his stock and options. His sales are out of necessity and benevolence. The necessity part is fueled by a need to exercise 25.5 million stock options within the next nine months (equivalent to the ave. daily trading volume). The benevolence part is based on his desire to pay U.S. taxes, which he can only do so by realizing taxable gains since he receives no salary.

But, will he make good on last week’s Twitter poll and sell 10% of his shares? If you include his options that expire next year, then definitely. If he didn’t mean to include those in his Twitter challenge, then expect an additional 17+ million shares to be sold. Either way, Uncle Sam will be happy to collect. Musk’s Twitter Poll last weekend may have been a hoax, or just for show. Elon set up a 10b5-1 plan on September 14th and was going to make sales regardless of how his Twitter followers voted. He’s a sneaky one!

Should we be concerned that Elon Musk is selling? Well, based on his prior sales, the Smart Insider poll says….

  • $TSLA – Tesla (currently $1,163 per share) Musk sold $25m at $3.40 in July 2010 and sold $593m at $42.64 in May 2016..
  • $PYPL – Paypal (currently $202) in July 2002 he sold $12m at $19 (prices not comparable), Paypal was acquired by Ebay in October 2002.

Surprisingly, these are all the public filings of sales we have for him. Based on this short sample, the Smart Insider poll says, “Do not be concerned”, at least based on the timing of these prior sales. What might be more telling, however, is not what he sold, but what he held onto.

As for now:

  • On 10-Nov-21 Elon Musk (Tesla CEO) sold 2,367,566 shares at $1,079.33, getting $2,555,374,120
  • On 11-Nov-21 he sold additional 639,737 shares at $1,074.34 and received $687,297,096
  • On 12-Nov-21 he also sold 1,200,000 shares at $1,029.67 and got $1,235,607,360
  • He still owns 166,285,682 stock which is 16.56% of shares in issue.

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