This week, Kimbal Musk, a Tesla director, exercised options that allowed him to sell shares of the electric vehicle manufacturer for a net $17 million.
Such a deal would typically not just be highly contentious but also impossible.
Kimbal Musk’s Tesla Share Sale Raises Questions
Kimbal, the younger sibling of the CEO, has access to information about the market, and insider transactions are prohibited until after Tesla announces its quarterly profits on April 19th.
But, the restaurateur and founder of a hydroponics farming company revealed he had previously planned the transaction in December, or almost four months earlier, under a so-called 10b5-1 plan in a regulatory document made public on Wednesday.
This enables insiders who have access to critical nonpublic information, such as Tesla’s first-quarter financial results, to sell shares independently of looming key events.
In terms of the plan, Tesla reported that on Monday, Kimbal Musk exercised stock options that were set to expire in June 2025, entitling him to buy 100,000 shares at a discounted price of $24.73 per share, or over 90% off the previous closing price.
He then went back and sold every single one of them in 11 separate blocks at prices ranging from $192.78 to $202.64, netting him over $17 million and leaving him with just over 1.6 million shares.
Since the initial COVID-19 wave sparked a remarkable rally that saw the company’s market value soar past all other vehicle competitors to claim its place among the elite ranks of global megacaps, Tesla officials have frequently used the stock as their own personal piggy bank.
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History Of Insider Sales At Tesla
Since then, the carmaker’s officers and directors, most notably Elon Musk, have only allowed their presence in the market to be felt through ongoing disposals that harm their base of loyal retail investors in particular.
This means that Tesla’s insiders have not thought the firm provides an alluring enough return on their capital, a belief that has only become stronger since Musk appears to have forgotten his words from October, according to which the board would contemplate a “substantial buyback” of stock.
Prior to the pandemic, when Tesla was valued at about a fifth of what it is now, insiders last showed enough confidence to purchase shares at the going market price.
As part of Tesla’s $2 billion capital raise in February 2020, Elon Musk spent $10 million and Larry Ellison another $1 million on shares.
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