Ivan is a Big Tech and India specialist. He also covers security, platforms, AI, and apps for TNW. It's a lot of stuff. He loves to say "Bleh." Ivan is a journalist covering Big Tech, India and policy. He also covers security, platforms, and apps to TNW. It's a lot of stuff. He loves to say "Bleh."
Elon Musk, a billionaire and entrepreneur, asked Twitter whether he should sell 10% off his Tesla stake. It's not unusual for Elon Musk to ask strangers on social media about financial advice, given his past antics.
Musk sold nearly 3% of his shares, 4.5 million stocks worth close to $5 billion over the course of the next few days. Everyone believed that Musk had indeed heard the Twitterati, and decided to sell his shares. Crazy, right?
However, Musk's sale was planned in advance according to Newley Purnell of the Wall Street Journal. He needed to sell this property in order to meet his tax obligations.
According to a document submitted to the Security and Exchange Commission, Musk was simply using a pre-determined trading plan to allow him to sell his stock at a specific time. These 10b5-1 plans, which allow company insiders sell stock at a predetermined price and date calculated using a formula, are explained by WSJ in their story.
It is important to remember that only a portion of the $5 billion sale was pre-determined. After the weekend, he sold 3.5million shares worth more than $3.88billion. This sale was not planned or pre-planned.
Musk's Twitter sarcasm made the sale seem like an impulsive purchase, like ordering McDonald's after a night of drinking. It turned out that it was a pre-planned and calculated financial decision. It was a good decision.
Although the famous entrepreneur's stock sale has garnered him more attention than he probably needed, it caused Tesla stock to drop over 13% over the past five days. It was not good for shareholders.
The SEC filing can be viewed here.