Tesla’s Musk exercises options, sells some shares to cover tax bill

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(Businesshala) – Tesla Inc said on Wednesday that Chief Executive Elon Musk sold some of his stake in the electric carmaker to meet tax obligations related to exercising stock options.

FILE PHOTO: Tesla Inc. CEO Elon Musk walks next to a screen showing an image of a Tesla Model 3 car during the opening ceremony of the Tesla China-made Model Y event in Shanghai, China January 7, 2020. Businesshala / Ellie Song / FILE PHOTO

The electric carmaker’s stock rose 2% after the news rang the bell, helping to offset a multiday sell-off that threatened the company’s position in the $1 trillion club.

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Musk told Twitter users here on Saturday about the sale of his 10% stake, allaying concerns that such a sale could hurt Tesla’s share price. Tesla rose 4.3% to $1,067.95 in Wednesday’s trading session.

In its filing, Tesla said Musk sold shares on Monday to meet tax withholding obligations related to exercising stock options to buy 2,154,572 shares.

While Tesla lost nearly $150 billion in market value this week, retail investors have been net buyers of the stock. Some 58% of Tesla’s trade orders on Fidelity’s brokerage website on Wednesday were for buy rather than sell.

Retail investors netted $157 million on Monday and Tuesday, according to Wanda Research.

Tesla is now up more than 51% in 2021, thanks in large part to an October rally that was driven by an agreement to sell 100,000 vehicles to rental car company Hertz.

“The company itself is under fire, with strong results,” said Tim Grisky, a senior portfolio strategist at New York-based investment management firm Ingalls & Snyder. “It’s not going to fade away anytime soon.”

Bullish sentiment returned to Tesla’s options on Wednesday, with calls trading around 1.1 for each put. Calls are typically used for bullish trades, whereas buying puts show a bearish bias.

According to a Businesshala analysis of Trade Alert data, the company’s options accounted for about $109 billion in premium changing hands over the past two weeks, or one out of every three dollars traded on the US-listed options market.

Reporting by Shruti Shankar and Subrata Patnaik in Bengaluru Additional reporting by Noel Randevich in Oakland, Calif.; Medha Singh and Bansari Mayur Kamdar in Bengaluru; Katanga Johnson in Washington, and Saqib Iqbal Ahmed and Ira Iosbashvili in New York Editing by Arun Koyur, Matthew Lewis and Lisa Shumaker


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