Hey everyone me kevin here: it's official elon musk has begun selling shares of tesla stock. Let's get right into what's going on quick mention, though this video is brought to you by masterworks link in the description and more on them in just a moment. So folks, elon musk was assigned way back in 2012 or awarded, i should say, 22.8 million shares of tesla at a strike price of six dollars and 24 cents, and the way stock-based compensation works is that if you get awarded stock options that vest at a certain Point in the future, you either exercise them to take the shares or you lose them. You obviously don't want to lose them, so you're going to exercise them, but the problem with that is if the stock, for example, is selling for twelve hundred dollars and your options have a strike, they're kind of like call options.

They have a strike of six dollars and 24 cents. When you receive the shares for six dollars and 24 cents, you are going to have to pay taxes on the difference here. That's because this is a form of compensation. Now elon musk, i'm not sure.

If he's going to have to pay these taxes as a quarterly this year or he'll, have if he'll have to pay them uh in in on april 15th, or if he's going to go on extension next year to pay them, so he might be able to play With the money or just get rid of the tax bill, just pay the tax bill now and get it over with that's, also a possibility who knows, maybe in the meantime he'll throw his money into bitcoin. That'll. Just be speculation though, but elon musk has to pay taxes on this difference, so that would be in this case about eleven hundred ninety three dollars and seventy six cents that he would have to pay uh in uh intel, well, taxes on and so taxes on. This would probably be somewhere in the neighborhood of 45 percent uh, possibly closer to 50, just depending on his tax situation and uh, exactly where his domicile is.

I believe he's in texas now uh, but i don't know if he's been there the full year. So that's obviously going to depend since he just moved from california, but anyway the point is he's going to have to pay a lot of taxes on 11 93 in gains. In this example, i think he's sold for slightly less than this, so probably a little less than this. But the point is he's gon na have to pay taxes on this.

So elon musk knows that he can borrow money. He could take out a margin loan. Basically, a loan against his stake in tesla or he could sell shares to cover his tax liability. We expect that his tax liability would be somewhere between 13 to 14 billion dollars and if tesla sells somewhere around 10 of his tesla holdings, he would get somewhere around 28 billion dollars.

But he would probably also have to pay taxes on a substantial portion of that 28 billion dollars, so you'd probably have to pay another - let's say 14 billion dollars, and this shows you how literally his full 28 billion dollars could potentially be going to taxes. So the portion that he sold the 28 billion dollars that he potentially sold that's about 10 percent to cover uh the taxes he has on his options, but then also the taxes on the shares that he sold. So potentially all that money is going to taxes. Now he's still going to be way up, i mean consider this 22.8 million shares of tesla hey siri, 22.8 million times eleven hundred second, here 25 billion, eighty million yeah.

So basically, really what he's doing here is it's like he liquidated approximately 28 billion dollars paid that all in taxes to cover taxes on his options that he got, and then he got the shares right back via options. It's brilliant, but what's even more brilliant, is he branded it as if he let twitter decide that for him? Obviously, if you're going to put on twitter hey, should i pay more in taxes, you're, probably going to end up paying more taxes right, but anyway, elon musk just filed his first form s4. We expect that there's going to be another one tomorrow, because remember you have two days to file the form, i'm going to show you the form to show you when he sold but uh quickly. I just want to mention that we do have a sponsor for today's video, and that is masterworks.

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On monday, we have options here of 2.1 million shares that were acquired, and this is just a fraction of the total options that elon musk has remember. Elon musk has the right to acquire 22.8 million shares and uh. This is only a sale of 934 000 shares. So, given that we, when we look at what kind of happened in the stock in tesla stock, it looks like a lot of these.

Sales were done on tuesday, which is kind of what we expected, which elon musk has until the end of the day. Tomorrow to file this sec form four to disclose that he so that he did sell the rest on tuesday if he indeed did, but take a look at this. If we go to the five-day chart here, the first big drop that we get is on monday. When the stock drops about five point: nine five percent.

First batch of elon musk selling, you could see the prices around 1161 1140 uh going down to 1148 intra minute. You know, or intra hour, went down to 11 35 and lower and then tuesday we had significantly more volume and that's when we fell about 12 on the day now today, tesla stock is actually up 4.34, potentially implying that the selling is done. So what we have is an indicator that the first batch of selling was done here. The second batch is selling we're sure of this.

We have a disclosure of this. Only about five percent of the shares were actually sold on this date, but uh on tuesday. We expect the rest of the shares were sold because look at the volume folks, the average volume for tesla before this crazy run, was somewhere around 13 to 20 million shares per day. Well, if you go to monday, you get 33 million shares of volume, which is a substantial uptick from just friday before that at 21 million or the day before that at 25 million, so substantial uptake at 33 million you'd expect a lot of media enthusiasm went into Potentially selling tesla stock ahead of elon as well, though, and then the very next day we had 59 million shares of volume, which is almost double the normal volume.

So it kind of makes sense that if elon was going to be selling around uh 10 of a stake, or maybe around 28 million shares, which is roughly what he was getting in stock options, that tuesday was probably the day remember he's getting 22.8 million shares uh In in stock options, 28 20 - i'm sorry, 22.8 million shares 28 billion dollars worth okay, so 22.8 million shares. It makes sense because if we remove all of that extra volume from tuesday's volume of 59 we'd get to about 31 million uh of of share volume, which would kind of be right in line of what we've seen in prior days, uh and certainly still elevated from Uh prior weeks, because we've been on this sort of euphoric run so bottom line, elon musk has started his selling sold about five percent of what he committed to on monday. We expect that the rest was done on tuesday. We will get the final form for probably tomorrow afternoon uh.

This is very good news, though, keep in mind that the stock market is closed tomorrow, though, so that means no course member live stream, unfortunately, for all of those of you in the stocks and psychology and money group or any of the other courses linked down below With that coupon code linked below stock doc check that out, learn my psychology of money and how i do fundamental analysis and all the good stuff so check that out, link down below we'll see you again on friday. Folks, thank you. So much for being here enjoy veterans day tomorrow and we'll see you next time you.