Billionaire Musk sells more shares in whirlwind Tesla stock ride

Tesla top boss Elon Musk sold another block of company shares worth about US$700 million, filings showed on Friday (Nov 12), as the billionaire takes advantage of a meteoric rally that drove the electric carmaker's value to over US$1 trillion.

The second round of hefty stock sales this week comes just days after the world's richest person and Tesla's top shareholder tweeted that he would sell 10per cent of his shares if users of the social media platform approved the move.

Musk disclosed the additional share sale, which was worth about US$687 million, in regulatory filings after offloading about US$5 billion in stock earlier in the week.

Musk's trust sold 587,638 and 52,099 shares on Nov 11 in multiple transactions, according to two separate filings on Friday.

In the first round of the sale, filings showed that Musk's trust had offloaded nearly 3.6 million shares worth about US$4 billion.

The stock sales, which marked the first time that Musk cashed out on a stake of that size since the electric carmaker was founded in 2003, were massive by capital market standards, bigger than the initial public offerings of most companies.

By getting Twitter users to green light the move, he has also skirted speculation of cashing out because Tesla's valuation has become frothy after its shares hit record highs.

INVESTORS EXHAUSTED

Tesla shares were down 1.5 per cent at US$1,050 in early trading and were headed for their first weekly decline in 12 weeks.

"Tesla investors are exhausted after the roller coaster ride they've been on. I don't expect a big impact on the share price after what we've already been through," said Fiona Cincotta, senior markets analyst at City Index in London.

So far this week, Tesla has lost US$157 billion in stock market value, more than the combined market capitalizations of Ford Motor and General Motors.

Despite the week's losses, Tesla is still the most valuable US automaker. Its stock had soared in the past 11 weeks before the rout, underscoring demand for shares of electric vehicles (EV) makers.

After the blockbuster market debut of Rivian Automotive Inc on Thursday, the two most valuable US automakers are EV companies.

In a veiled jab at the Irvine, California-based rival, Musk tweeted on Thursday: "There have been hundreds of automotive startups, both electric & combustion, but Tesla is (the) only American carmaker to reach high volume production & positive cash flow in past 100 years."

COVERING TAX OBLIGATIONS

Musk also sold another 934,000 shares for US$1.1 billion in the first round of sale to cover tax obligations after exercising options to acquire nearly 2.2 million shares.

Nearly 800,000 options, or about 12 per cent of Tesla's open contract, are set to expire at the close of the session on Friday, potentially adding to short-term volatility as traders and options dealers make adjustments.

Musk had previously said he would have to exercise a large number of stock options in the next three months, which would create a big tax bill. Selling some of his stock could free up funds to pay the taxes.

Prior to the sale, Musk owned a stake of about 23 per cent in Tesla, including stock options.