Selling stocks to pay taxes, selling houses to avoid taxation, Musk's "conspiracy" is about to end

The reduction of Tesla's holdings is coming to an end,

How many stocks did Musk sell ?

Editor| US Stock Research Agency

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Joker, genius, leader, visionary, industrialist, performer, rogue, Edison (inventor), Barnum (father of modern public relations), Carnegie (entrepreneur), and Dr. Manhattan (in DC comics) Superhero, scientist) crazy mixture.

This is the evaluation given by Time Magazine when it announced Musk as the Man of the Year in 2021. Being put on various labels by the outside world is also closely related to Musk's behavior. Recently, Musk has generously reduced his holdings of Tesla shares since November. Since the announcement of the plan, Tesla's stock price has repeatedly jumped around $1,000.

Musk announced on December 14 that he would be the first taxpayer in American history. But in the face of a huge shareholding reduction plan that does not know when, even if it is to pay taxes, many people may want to ask: Have you sold enough?

The cabbage price option, Musk hasn't sold out yet

According to the official website of the SEC, as of December 23, 2021, there have been 33 insider trading records led by Musk. Since the start of the reduction in November, Musk has sold approximately 15.58 million shares Sla stock, cashed in more than 15 billion U.S. dollars. About 90% of its promised target of selling approximately 17 million shares has been sold.

The origin of Musk’s equity is very “long-term”: In 2012, Tesla’s board of directors and Musk reached a gambling agreement. The board of directors gave Musk ten business goals, including Tesla’s market value exceeding Ford and Musk. GM has completed engineering prototypes, car prototypes, and mass production of Model X and Model 3, with a gross profit margin of more than 30% for four consecutive quarters.

In the 10 years since 2012, for every time Musk achieved one of these 10 operational goals and the company’s market value increased by US$4 billion, he was given a 0.5% stock option reward (exercise price of US$6.24 per share, That is to buy at this price and sell at the market price), a total of 5%. And Musk eventually received 22.8 million options. In March 2018, Musk used the "CEO Performance Award" to obtain a total of 101.3 million stock options (adjusted by the 2020 stock split and five).

On August 13, 2022, the earliest 22.8 million options will expire and face high taxes . Therefore, Musk began its way of exercising rights.

The US Stock Research Agency sorted out some of the important nodes (all in 2021):

In September, as Tesla stock options expire in 2022, Musk’s marginal tax rate will exceed 50%. Musk formulated a tax-related fourth-quarter stock sale plan. He also admitted to paying taxes on his salary. This is part of the reason for the reduction in Tesla stock this quarter.

On November 6, Musk launched a poll on Twitter to publicly solicit opinions from his tens of millions of fans on whether they should sell 10% of Tesla's stock. In the end, 58% of netizens supported him to sell. At that time, Musk held a total of 170.5 million Tesla shares. The news caused Tesla's stock price to fall by more than 6% before the market that day, and the closing fell by 4.84%, and the market value shrank by about 60 billion US dollars.

On November 8, Musk sold 934,000 Tesla shares for the first time.

On November 9th, 10th, 11th, 12th, 15th, 16th, and 23rd, Musk executed the sell-off plan continuously and sold about 9.2 million Tesla shares, worth about tens of billions of dollars. About 54% of the sales commitment.

On December 2nd, 9th, 13th, 16th, 21st, 22nd, Musk sold about 6.38 million Tesla shares, worth about 6.1 billion U.S. dollars, and completed about 91% of the total sales commitment. According to a recent SEC document as of December 22, Musk has 2,325,944 Tesla shares remaining unsold from the complete reduction plan, with a total holdings of approximately 170 million shares.

On December 22, Musk said in an interview that he had sold enough shares to reach the 10% level he had promised. But on December 23, he changed his slogan on Twitter, saying "There are still a few parts left, but it's almost done."

With Musk's sell-off, Tesla's stock price ushered in continued volatility. The highest point of Tesla's stock price for the year was $1234 on November 4. Musk dropped nearly 12% for the first time two days after reducing its holdings, and hit a low of $886 on December 21. However, on the evening of December 23rd, Eastern Time, Tesla's stock price closed at $1,067, and its market value has returned to $1 trillion. Based on this calculation, the total drop brought by the reduction is about 13.5%. This year, Tesla's stock price still has a 48.4% increase.

Previously, on the Reddit forum, many netizens expected Tesla's stock price to be "halved." However, more analysis agencies have increased Tesla's target stock price instead.

On November 18th, Wedbush analyst Daniel Ives raised his target price for TSLA stock from $1,000 to $1,400 in a report to a client. He said: “Tesla is in a good position to expand production capacity (Berlin, Austin), and unit demand will increase by more than 50% year-on-year in 2022.” Royal Bank of Canada Capital Markets analyst Joseph Spak believes: “As the world shifts to electric vehicles, The demand for Tesla cars will be solid."

So, based on the preliminary assumption of tax payment, has Musk's goal been achieved? Will Tesla's trend be further affected?

The tens of billions tax story comes to an end,

But Tesla also wants to "double"

According to US law , the tax standard for option income is 37% plus a net investment tax of 3.8%-this is the highest level of the overall tax standard. In addition, since Musk was a California resident when he obtained most of the options, according to local relevant policies, he must also pay an additional 13.3% tax of the California government. The combined total tax rate will be 54.1%. According to the average price, Musk faces a total tax of up to 15 billion U.S. dollars.

However, as far as the current situation is concerned, the stock sold by Musk is enough to cover tax. In addition, in early December, Musk sold his last luxury home in California for $30 million. In fact, selling a house is also to evade California's personal income tax and capital gains tax. If according to the previous series of complicated standards, Musk will face this part of the tax will be as high as 2.5 billion US dollars.

Nevertheless, Musk will not necessarily be able to escape the "legal net" of taxation in the future. Senator Elizabeth Warren (Elizabeth Warren) of Massachusetts has been pushing Congress to impose heavy taxes on the income and assets of the rich, and this week he verbally confronted Musk on Twitter. Musk was tough: "Tell those who are curious that I will pay more than 11 billion U.S. dollars in taxes this year. Just open my eyes for 2 seconds to know that my tax payments this year will exceed any American in history. "

"If people could die because of sarcasm, she would have died long ago," he said. At present, it is not yet certain whether the tax policy will be changed in the future. Musk also needs to repay the loans for the construction of Space X, The Boring Company, Neuralink and other companies. Earlier, Musk pledged 92 million Tesla shares to creditors.

Compared with the complexity of Musk's taxation, Tesla's certainty is more "simple". Wedbush analyst Daniel Ives said: "We believe that 2022 will be a turning point year for the electric vehicle industry, because in the coming year, a large number of consumer demands are ready."

Musk hopes to produce an average of 20 million electric cars a year in the next ten years, which is more than twice the current output of other auto manufacturing giants. Next year, the Berlin factory will start construction and the Shanghai factory will expand production. Musk also tweeted his intention to go to the Shanghai factory. Daniel Ives estimates that the key to Tesla’s overall bull market argument is still China, which will account for 40% of Tesla’s deliveries by 2022.

In the most recent third-quarter performance , Tesla delivered a total of 241,300 vehicles, exceeding the guideline limit, an increase of 73% year-on-year, and the gross profit margin remained at a high level of more than 30%. In contrast, the newly-listed Rivian, Lucid and other new car manufacturers basically have no large-scale delivery capabilities. China's Weilai, Ideal and Xiaopeng will expand production in 2022, but it is still difficult to threaten Tesla's position.

To the market, Musk belongs to Tesla, but Tesla is not only Musk, but the biggest beneficiary of the development of the electric vehicle market.