Tesla - 10/11/2021

SCENARIO 1: DOWN

EVENT: CEO Elon Musk to sell 10% of its shareholding in Tesla. Mr. Musk owns 177 million shares, or around 17.6% of total outstanding Tesla shares (around 1 billion). If he sells 10% of his holdings, that would be 17.7 million shares. Given today’s price of around 1040, the transaction could be worth around 18.4 billion dollars.

REASON TO SELL: TAXES. According to CNBC, Tesla CEO Elon Musk faces a tax bill of more than $15 billion in the coming months on stock options. The options expire in August of next year. Yet in order to exercise them, Musk has to pay the income tax on the gain. Since the options are taxed as an employee benefit or compensation, they will be taxed at top ordinary-income levels, or 37% plus the 3.8% net investment tax. He will also have to pay the 13.3% top tax rate in California since the options were granted and mostly earned while he was a California tax resident. Combined, the state and federal tax rate will be 54.1%. So the total tax bill on his options, at the current price, would be $15 billion.

TESLA STOCK PRICE ACTION (RECENT DOWNWARD CORRECTION): Tesla reached an all-time high of $1,243.25 on November 4, 2021. The stock traded at $1,044 on November 10, marking a downward correction of around 16%. When a downward correction is suffered, an instrument falls by between 10% and 30%. 30% correction from its recent all-time high of $1,243.25 would be a rate of $956.34.

Current Price: 1044.00

Example of calculation based on weekly trend direction for 1.00 Lot*

* 1.00 lot is equivalent of 1000 units
** Calculations for exchange rate used as of 10:10 (GMT) 10/11/2021

SCENARIO 2: UP

EVENT: CEO Elon Musk does not sell 10% of its shareholding in Tesla. Mr. Musk, who owns 177 million shares, or around 17.6% of total outstanding Tesla shares (around 1 billion), asked his Twitter followers whether he should sell 10% of his holdings, which would be 17.7 million shares. This, however, has not been confirmed by Elon Musk that it will be pursued.

LEGAL: Section 16(a) of the 1934 Act requires directors and specified officers of a public company to report their beneficial ownership of and transactions in the company’s securities to the SEC (Security and Exchange Commission) and the public. If an executive officer places an order with a broker to purchase or sell company securities on a Monday morning in New York, he must file the Form 4 with the SEC no later than 10 p.m. New York time on Wednesday. Anyways, nothing has been reported by the US Security and Exchange Commission on the matter.

TESLA STOCK PRICE ACTION (AFTER RECENT DOWNWARD CORRECTION): Tesla reached an all-time high of $1,243.25 on November 4, 2021. The stock traded at $1,044 on November 10, marking a downward correction of around 16%. The sell-off happened on headlines that CEO Elon Musk could sell 10% of its Tesla share holdings. If, however, Mr. Elon Musk does not act in accordance to the recent headlines, it may be expected a price recovery to levels between $1,130 and $1,243.25.

Current Price: 1044.00

Example of calculation based on weekly trend direction for 1.00 Lot*

* 1.00 lot is equivalent of 1000 units
** Calculations for exchange rate used as of 10:10 (GMT) 10/11/2021
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