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Why Elon Musk Made the Decision to Sell Tesla’s Shares

Elon Musk is one of the most extravagant billionaires in the world. So, analysts, journalists, and investors are closely monitoring his comments as well as decisions. Tesla’s CEO sold nearly $5 billion in Tesla stock according to documents. Still, Musk holds more than 166 million shares.

Elon Musk’s trust sold more than 3.5 million shares worth over $3.8 billion in a flurry of trades carried out on Tuesday and Wednesday. Interestingly, those transactions were not marked as 10b5, meaning they were not scheduled sales.

On Wednesday evening, filings showed Tesla’s CEO is selling a separate block of Tesla’s shares via a plan that he set in motion on September 14. In particular, those sales amount to more than 930,000 shares worth over $1.1 billion.

The world’s most affluent person sold shares in part to satisfy tax obligations related to an exercise of stock options.

Musk likes to make comments regarding various topics. He has millions of followers on Twitter. Interestingly, before that sale plan was made public, he asked his Twitter followers to vote in an informal poll. He promised to fulfill their decision.

Following the Twitter poll organized by Musk, shares of Tesla dropped more than 15% on Monday and Tuesday, before rebounding more than 4% on Wednesday. For instance, the company’s stock closed down 11.99% on Tuesday. Its stock was higher in after-hours trade on Thursday.

It is no secret that, Tesla’s CEO doesn’t take a salary or cash bonus. Musk’s wealth comes from those stock awards and gains in Tesla’s share price. He received a hefty options package as part of a CEO performance plan in 2012. The company gave Musk 22.8 million shares.

In the past, the company’s CEO signaled that he was likely to sell “a huge block” of his options. He mentioned the fourth quarter of the year.

He spoke at the Code Conference in September. The company’s SEO said when his stock options expire at Tesla, his marginal tax rate would be over 50%.

Tesla’s current and former board members including chairwoman Robyn Denholm, Musk’s brother Kimbal Musk offloaded hundreds of millions of dollars worth of Tesla shares since October 28. Last month, Tesla’s market cap surpassed $1 trillion for the first time in its history.

Only Kimbal’s transaction was not listed as a 10b5 or planned sale. Elon’s younger brother sold around $109 million worth of his shares a day ahead of Elon Musk’s Twitter poll.

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