Musk Tax
Elon Musk is a wild man for sure. He names his kids wild things, creates wild projects and companies, and most importantly he tweets wild things, criticizing governments and giving plugs to cryptocurrencies. Recently, he tweeted that he would sell 10 percent of his stake in Tesla, his EV company, to help with the billionaire tax. He posted a poll on Twitter, and “Yes” was the winner, making him go through with the decision. It caused a lot of buzz regarding Tesla’s share price, which sat at 1,000 dollars, but things have changed since.
When announced, the tax bill amounted to 2.7 billion dollars, which is crazy until you look at Musk’s net worth, which lies around 300 billion. Ever since the tweet, Tesla’s share price has taken a hit in what has been a great few weeks for the EV sector, reducing the tax bill by 380 billion dollars from its peak, and the money is continuing to decrease. In the last few days, Musk is continuing to exercise more and more options, and this is reducing his tax bill, but also hurting Tesla’s tax deductions. A stat acquired by the Wall Street Journal found that for every 1 million dollars Musk exercises in options, he saves 370,000 dollars in tax while Tesla loses 210,000 in deductions. This puts the CEO in a unique position, and we are yet to see if this will have a toll on Tesla’s share price, but Tesla hasn’t commented yet, which signals that they are fine with letting Musk do whatever he wants to. What do you think about Musk’s decisions?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
