Why Is Elon Musk Selling More Shares of Tesla Stock?

Recent SEC (Securities and Exchange Commission) filings show that multibillionaire, Elon Musk, recently sold an additional 934,000 Tesla shares for a total of $9.8 billion. When combined with other recent stock sell-offs, Musk has sold a total of 9.1 million shares, which brings him past the halfway mark of his promised 10% Tesla stock sell-off.

Why is Musk selling off 10% of his Tesla stock?

Publicly, it started as a Twitter challenge where Musk asked his more than 60 million followers if he should sell off 10% of his Tesla stock. His fans delivered a resounding yes.

Behind the scenes, however, Musk already had a stock sell-off plan in place. This prearranged plan was designed to systematically sell Tesla stock related to the exercise of stock options. That’s right, Musk is selling a small portion of his Tesla stock purely for tax purposes. While Musk is set to earn billions through these various stock sell-offs, he will also incur a tax bill of at least $3.5 billion.

Will Musk’s Stock Sell-off Affect Tesla Stock?

In direct response to Musk’s stock sell-off, Tesla’s stock price fell nearly 15.5% but was able to rebound by 9.4% by the end of trading. The reality is that even if Musk manages to sell off a full 10% of his Tesla stock, it’s unlikely to leave long-lasting effects for investors.

First, even with a 10% sell-off, Musk will still hold nearly 170 million shares in Tesla. Secondly, Tesla has a market value of over $1 trillion and there’s no indication that that will decrease any time soon. Most importantly, Tesla’s stock soared by more than 740% in 2020 and an additional 57% so far in 2021. These figures are more than enough to keep investors interested.

With more Musk sell-offs predicted for the near future, investors hoping to add some Tesla stock to their portfolio may be able to grab some at a slightly reduced rate.