NEW YORK (REUTERS) – Tesla’s chief executive officer, Elon Musk, sold another block of company shares worth about US$700 million (S$946 million), filings showed on Friday (Nov 12), as the billionaire takes advantage of a meteoric rally that drove the electric-car maker’s value to over US$1 trillion.
The second round of hefty stock sales this week comes just days after the world’s richest person and Tesla’s top shareholder tweeted that he would sell 10 per cent of his shares if users of the social media platform approved the move.
The electric-car maker’s stock was down 3.3 per cent at US$1,028.89 on Friday afternoon.
Musk’s trust sold 587,638 and 52,099 shares on Thursday in multiple transactions totaling about US$687 million, according to two separate filings on Friday.
Earlier this week, Musk disclosed he had offloaded some US$5.1 billion in Tesla stock. He has now sold about 3 per cent of his shares, according to Reuters calculations.
The stock sales, which marked the first time that Musk cashed out on a stake of that size since the company was founded in 2003, were massive by capital market standards, bigger than the initial public offerings of most companies.
By getting Twitter users to green-light the move, he has blunted potential criticism of cashing out at a time when Tesla’s valuation has become frothy and shares are at record highs.
Winning streak in danger
Tesla’s stock fall on Friday put the company’s shares on track to lose about 15 per cent for the week and snap an 11-week winning streak.
So far this week, Tesla has lost US$180 billion in market value, more than the combined market capitalisations of Ford Motor and General Motors.
Despite the week’s losses, Tesla is still the most valuable US automaker. Recent strong gains in the stock have underscored demand for shares of electric vehicle (EV) makers.
After the blockbuster market debut of Rivian Automotive on Wednesday, the two most valuable US automakers are EV companies.
In a veiled jab at the Irvine, California-based rival, Musk tweeted on Thursday: “There have been hundreds of automotive startups, both electric & combustion, but Tesla is (the) only American carmaker to reach high volume production & positive cash flow in past 100 years.”
Nearly 800,000 options, or about 12 per cent of Tesla’s open contracts, are set to expire at the close of the session on Friday, potentially adding to short-term volatility as traders and options dealers make adjustments.
“We expect the share sales will continue, as Musk holds millions of options worth billions of dollars that would otherwise expire worthless, and he has also prearranged share sales under 10b5-1 plans,” said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group in New York.
Musk had previously said he would have to exercise a large number of stock options in the next three months, which would create a big tax bill. Selling some of his stock could free up funds to pay the taxes.
Prior to the sale, Musk owned a stake of about 23 per cent in Tesla, including stock options.