It has been revealed that electric car billionaire, Elon Musk, has sold more of his Tesla stocks again. Musk sold another 934,100 Tesla stocks, which fetched him about $1.02B.
Reason For The Sale
Musk intends to use all he earns from selling his shares to offset his tax obligations. Before beginning the sale, Musk polled his Twitter followers to seek their opinion on selling his Tesla shares, with most of them supporting his idea. Hence, Musk began selling his Tesla shares in the first week of last month.
But no one can guarantee that he sold his shares based on the poll result. As of this writing, the Tesla boss has sold 10.2m Tesla shares (valued at $10.95B). Nevertheless, the multi-billionaire can exercise a buy-back option for his Tesla stocks. The buy-back option allows Musk to re-purchase 10.7m shares for $6.23/share, but this option will become invalid by July 2022.
The eastern time trading session indicates that Tesla shares trade above 0.65% in the pre-trade session. This increase might be connected with an official announcement by the Tesla company that it has moved its headquarter location from Palo Alto, California, to Austin, Texas.
Musk Has Yet To Reach The Required Threshold
A few months ago, Musk hinted that he might need to sell off vast amounts of his shares before this year ends. There are even rumors that he had already put a plan in motion to that effect before he sought the opinions of his Twitter followers. However, Musk must be ready to offload at least 17m of his Tesla stocks to meet the required threshold to help him offset his tax completely.
When his exercisable options are even considered, Musk might even need to sell more of his Tesla stocks to meet the required threshold to help him offset his tax completely. Selling 10% of his Tesla stocks will help Musk reduce his tax amount significantly. Perhaps, that explains the relocation of his company headquarters to Texas.
Taxes And Rise In Net Worth
Currently, Texas does not impose a tax on individual capital gains or state income. Conversely, California is renowned for charging the highest tax on personal capital gains, notably wealthy individuals. A Bloomberg billionaire data indicates that Musk’s asset evaluation of almost $285B makes him the richest person globally.
Musk’s net worth rose sharply since the start of this year, rising by almost $129B. Tesla shares’ astronomic rise is one of the factors responsible for the sharp increase in his wealth. The purchase of 100K Tesla EVs by Hertz global holdings (a famous US-based car rental firm) is estimated to have caused Tesla’s stock price to gain 13% two months ago. Consequently, the $4.5B purchase caused Tesla’s overall evaluation to exceed $1 Tr.
It has to be noted that the Hertz purchase was the first of such colossal orders in the EV purchase history. Also, this purchase contributed significantly to the rise in Musk’s wealth. Hertz made this purchase to revamp his car rental operations and start using electric vehicles that won’t negatively impact the environment.