Elon Musk has previously said that he will be “the last one to sell his Tesla stocks”, but the CEO now clarifies what it means in practice.
He plans to sell a ‘major’ stake in Tesla in ‘about 20 years’ to finance SpaceX’s Mars colonization plans.
Musk is in a unique position as the CEO of two multi-billion-dollar companies: Tesla and SpaceX.
Investors, analysts, and the public, in general, have long been fascinated about how he juggles his roles among the two companies, and now his many new startups, like The Boring Company, Neuralink, and maybe even a new media company?
At one point, Musk expressed interest in leaving his role as CEO of Tesla in order to focus on SpaceX while remaining Chairman of the Board and being involved in product development at the automaker.
That was supposed to happen after achieving volume production of the Model 3, but he appears to have given up on those plans as he settles in his dual CEO role. He received a new CEO compensation plan at Tesla which is based on a long-term commitment.
The compensation plan could also ultimately result in a multi-billion dollar payout that would significantly increase Musk’s already large stake in Tesla.
Today, the CEO clarified his long-term plan for his stake in the company and stock options from his compensation plan:
I asked Musk to clarify his position and he did with a rough timeline:
Musk is referring to his sale of 2,782,670 shares of Tesla in 2016, which at the time was worth close to $600 million, to pay taxes and donate to charity.
As Musk previously stated, that’s the only reason he would sell Tesla shares.
Now he says that he will do that “every few years”, but he also added that in “about 20 years”, he will initiate a “major disbursement”, which likely means selling a large stake in the company.
When a CEO sells shares of their company, it sends a bad signal to the market. Musk has been careful not to do that unless absolutely required, like when having to pay taxes or give to charity, which also affects taxes.
He has even been adding to his position on occasion like he did this week when buying another $25 million worth of Tesla stock.
If you have to sell stock, it’s best to have a good reason and let the market know ahead of time.
Musk is taking no chance here with a look up to 20 years ahead.
It sounds like he plans to sell a large stake in Tesla in about 20 years, which he could then use to make a final investment to build his Mars colony.
SpaceX plans to finance most of it itself with its rocket launch business, space-based internet plans, and even rocket transport for Earth.
But with such grand plans come a great need for capital.
At that point, if the story plays out like it does in his compensation plans, Musk’s stake in Tesla will be worth well over $30 billion at the minimum – up to $150 billion at the higher of the plan.
A few billion dollars would go a long way to help his multi-planetary plans and like Musk said, at that point, Tesla should be in a “steady state” where it shouldn’t have too much of an impact.
What do you think? Let us know in the comment section below.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.