The curious story of Elon Musk’s Tesla stock sale and SpaceX’s fundraiser

It seems possible, perhaps even probable, that he has invested at least some of the money in SpaceX, the other company in which he is CEO and main shareholder.

Most of the $ 16.4 billion in Tesla stock sales since Nov. 8 will go to pay an estimated $ 11 billion in federal taxes, giving him more than $ 5 billion to do what he sees fit.
Although he ends up paying $ 2 billion in additional income tax to the state of California, where Tesla lived for most of the year when he was granted the options he now has to tax, Musk will be left with a nesting egg of more than 3 billion dollars. And his recent move of both his own home and Tesla̵[ads1]7;s headquarters to Texas, with its zero-income tax, makes it unlikely he will have to pay the maximum possible tax to California.
Perhaps more telling: Some footnotes in the archive that reveal details of the sale, along with the timing of the last two stock transfers to SpaceX, increase the possibility that Musk will move some of his fortune from listed Tesla (TSLA) to shares in his privately owned company SpaceX.
These trades are unique to Musk, the country’s high-profile CEO. It is the first time in the 12 years that Tesla has been public that he has held on to cash from the sale of the company’s shares, instead of selling just enough shares to pay threatening tax bills.
His timing is good, as the sale frees up money at a time when Tesla is doing very well in the market, becoming the sixth company in history worth $ 1 trillion, lifting Musk himself to the status of the richest person on the planet. . And it’s done at a time when his other high-profile company, SpaceX, is out in the market, raising hundreds of millions in cash to fund its ambitious goals. These two facts, together with details revealed in the various registrations, certainly increase the possibility that he pumps money into SpaceX.
Neither SpaceX nor Tesla (TSLA) responded to requests for comment on how Musk uses the proceeds from the sale of shares.

Most Tesla shares are sold to cover taxes

Musk sold 10.3 million of the shares on the same days as he exercised options to buy another 22.9 million shares in the Tesla share. The sale took place on 11 separate days from November 8 to December 28.

These options were to expire on August 13, 2022, so it made sense for him to use them to buy the shares. But once he did, the value of the shares, minus the modest exercise price, became taxable income.

Musk sold shares immediately after the exercise of the options, with the SEC file noting that the transactions were made “only to satisfy the reporting person’s tax deduction obligations related to the exercise of share options.”

But not all.

Recent sales included the notation that 219,000 shares sold on December 28 were “only” to cover his tax bill. Another 715,000 shares he sold the same day, which gave Musk $ 776 million, went “partially to cover” his tax bill, according to the filing.

The next day, SpaceX submitted its own filing to the SEC, revealing that it had raised $ 337.4 million in new equity investment from an undisclosed investor.

And this is not the first time this year that a Musk sale of Tesla shares for purposes other than paying taxes was closely followed by SpaceX, which reported a new inflow of equity investments.

From November 9 to 11, Musk sold 5.4 million shares, raising $ 5.8 billion. These were shares he held in a trust, not shares he had just acquired as part of the exercise of options. And while his tax bill is likely to be much smaller on the sale of these shares, it is still significant – around $ 1.2 billion in federal long-term capital gains tax, leaving him with around $ 4.6 billion.

There is no indication in the submissions as to why he completed these sales, which marks the first time he has sold shares he has had in a long period of time, instead of the ones he has just acquired through the exercise of options.

It may be because he wanted to follow the outcome of a Twitter poll in which he asked followers if he should sell 10% of the stake to increase his taxable income. But it is equally possible that the motivation was to raise much-needed money for SpaceX.

On November 15, a few days after he made the unusual sale of shares from his trust, SpaceX revealed that they had raised $ 388 million in additional stock investments from an undisclosed investor.

And moneyX SpaceX

That cash infusion came at an important time.

In an email sent to SpaceX employees just before Thanksgiving, Musk is said to have warned that the company is facing a cash crisis due to problems developing the Raptor rocket engines and Starship rockets needed to launch the Starlink satellites in 2022 Starlink is a constellation of satellites designed to provide high-speed Internet service from orbit.

“We face a real risk of bankruptcy if we can not achieve a Starship flight rate at least once every two weeks next year,” according to the email reported by Space Explored and also by CNBC. Musk’s e-mail said that the company needed virtually all employees at work during the Thanksgiving party to solve the problems.

He also said that the company planned to increase the production of ground stations needed to connect Starlink customers to the Internet. He said it would create “several million units per year”, which he said would “consume massive capital”.

In a tweet that followed reports of the email, Musk said the problem with the Starship rocket and the Raptor engines was “gets fixed. “But in a December 29th chirping he said the first orbital test launch of the Starship rocket was delayed until the end of February due to the need to get approval for the unmanned FAA flight.

SpaceX and NASA also did not respond to questions from CNN Business about the email to SpaceX employees.

If SpaceX can fix the problems with the Starship rockets and Raptor engines and get Starlink up and running as planned, the value of SpaceX, which is already estimated to be worth more than $ 100 billion, could rise. The money that Musk and other investors have poured into it can lead to a financial bonanza when the company is listed on the stock exchange.
Elon Musk owes $ 11 billion in taxes after closing the Tesla share sale

SpaceX raised $ 1.2 billion in equity investments earlier this year, before these last two capital injections. Although the names of those who bought the additional shares are not public, the amounts for four separate infusions were revealed in submissions to the SEC.

It is not clear how much money Musk had available for him to invest in SpaceX before he began selling his Tesla shares on November 8.

The vast majority of his estimated net worth of $ 275 billion comes from the value of nearly $ 250 billion of Tesla shares and options he owns, as well as some money from his undisclosed stake in SpaceX. If Musk were to make further investments in SpaceX, selling Tesla shares was the most likely way for him to do so.

The reported email to SpaceX employees just before Thanksgiving is not the first time Musk has discussed the financial challenges and cash withdrawals involved in getting Starlink’s Internet service up and running.

“SpaceX must pass through a deep abyss of negative cash flow over the next year or so to make Starlink financially viable,” he said in a statement. chirping in February. “Every new satellite constellation in history has gone bankrupt. We hope to be the first not to do so.”

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