Stock market: Elon Musk sold Tesla shares with a vengeance, big tax

Elon Musk’s star is fading in the dome of the planet’s vast wealth. For a while, the richest man in the world, a whimsical billionaire, the founder of Tesla and a successful entrepreneur (Paypal, SpaceX, etc.) had to give the crown to Bernard Arnault (the main shareholder of LVMH, whose stock market value is several times higher). will only increase to 400 billion euros). And that’s amid Tesla’s stock hell-bent, 3-fold since the all-time high recorded in November 2021, when the American electric car giant’s stock market value is 13 figures (the capitalization is well above that). 1 trillion dollars).

Tesla’s very negative trajectory in the stock market was correctly anticipated by Capital’s premium stock market investment letter and newsletter Momentum, which warned its subscribers of the risk of a sharp drop in the stock (especially based on technical analysis). a few months ago. Tesla stock’s descent into hell is due to many factors. Overview.

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First, the car market is under pressure and its prospects are about half. “It’s going to remain very challenging over the next few years,” says Optigestion’s Nicolas Domont in an interview with Capital. And this after the already difficult years of 2020, 2021 and 2022, with the Covid-19 pandemic and its damage to the economy, the shutdown of China (only recently turning away from strictly zero-Covid) and the worsening global economy in the wake of the war in Ukraine and the burst of inflation (which affects the purchasing power of households and affects their consumption, including the consumption of electric cars despite their growing market share). “Disruptions in the production logistics chain, shortages of parts and shortages of semiconductors have hit the entire automotive industry hard,” notes Nicolas Domont.

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Tesla has not spared, especially since China is an important link in its global presence. And Chinese automakers are experiencing growth right now. They will overshadow Tesla and other Western automakers in the next few years. “The approach of Chinese competition will lower the selling prices of cars, which will hurt the margins of Tesla and other manufacturers. Tesla is gradually losing its premium side, as the offer of Chinese rivals tends to expand. As the supply of quality electric cars increases in the face of demand, sales prices tend to drop. Tesla’s Model 3 is not protected from this phenomenon either,” emphasizes Nicolas Domont.

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In the fourth quarter of 2022, Tesla disappointed financial analysts with lower-than-expected vehicle deliveries despite aggressive sales price cuts. And the deteriorating outlook is uncertain. The specter of a recession by 2023 is likely to weigh on demand for electric vehicles, which worries equity investors.

The latter also allowed Elon Musk to be less involved in Tesla’s management, while the billionaire was busy fixing Twitter. And to finance this massive purchase, Elon Musk also had to sell tens of millions of Tesla shares, thus mechanically increasing the pressure on the auto giant’s stock market. According to figures from VerityData, Elon Musk sold a total of 94,202,321 Tesla shares at an average price of $243.46 per share in 2022 for pretax income of about $22.93 billion. In total, Musk has sold nearly $40 billion in Tesla shares, an all-time high, since November 2021.

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Jahn notes that excluding taxes on the exercise of stock options, and with no special tax on the disposal of securities in Texas, Elon Musk will have to pay a 20% tax on Tesla shares sold in 2022 under the “federal capital gains tax.” -Francois Fleet, Allure Finances partner interviewed by Capital. A prospect that will force Elon Musk to write a $4.59 billion tax check to the US tax authorities…

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