Join us at TNW Conference 2022 for insights into the future of tech →

Inside money, markets, and Big Tech

Elon Musk wasn’t actually asking for your opinion on his $5B Tesla stock sale

Everything is planned

Elon Musk wasn’t actually asking for your opinion on his $5B Tesla stock sale
Ivan Mehta
Story by

Ivan Mehta

Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh." Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh."

The world almost turned upside down when over the weekend, Elon Musk asked on Twitter if he should sell 10% of his stake in Tesla. Given his previous antics, it’s not unprecedented for the billionaire to ask random folks on a social network about sensitive financial advice.

Musk eventually sold almost 3% of his shares — 4.5 million stocks worth almost $5 billion — over the next few days. This sale led everyone to believe that he indeed heard the Twitterati and made the decision. Crazy, right?

But as the Wall Street Journal’s Newley Purnell notes, Musk’s sale was pre-planned — at least partially. This sale was necessary for him to satisfy tax obligations.

A document filed to Security and Exchange Commission (SEC) confirms that Musk was just exercising a preset trading plan that allowed him to sell his stock at a scheduled time. As WSJ explained in its story, these 10b5-1 plans allow company insiders to sell stocks at a pre-determined price and date, calculated by a formula. 

It’s important to note that out of $5 billion, only a part of the sale was pre-determined. He sold 3.5 million shares worth over $3.88 billion after the weekend. This move was not pre-planned or scheduled. 

So, yes, Musk’s Twitter theatrics made the sale look like an impulsive decision like ordering McDonald’s after getting high at night. But it turned out to be a calculated and pre-planned financial decision after all. Meh.

While the celebrated entrepreneur’s stock sell has earned him some more publicity he probably didn’t need, it caused Tesla’s stock to dip over 13% in the last five days. Not good for the shareholders.

You can check out the SEC filing here.

Also tagged with