Stock market: Elon Musk sells Tesla shares with a vengeance, huge tax in sight
Elon Musk’s star is fading, in the galaxy of the planet’s great fortunes. At some point, the richest man in the world, the extraordinary billionaire, founder of Tesla and successful businessman (Paypal, SpaceX, etc.), had to give his crown to Bernard Arnault (principal shareholder of LVMH, whose stock value market has only increased to 400 billion euros). And this, against the background of the descent into hell of the Tesla share, divided by 3 since the historical peak recorded in November 2021, when the stock market value of the American giant of the electric car was 13 figures (with a large capitalization above .1 trillion dollars).
Tesla’s very negative trajectory in the stock market was correctly anticipated by Momentum, Capital’s premium stock market investment letter and newsletter, which alerted its subscribers with excellent timing to the risk of a sharp decline in the stock ( especially on the basis of technical analysis), a few months ago. The descent into hell of Tesla stock is due to many factors. Overview.
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First, the auto market is under pressure and its prospects are at half-mast. “It will remain very difficult in the next few years”, predicts Nicolas Domont, of Optigestion, interviewed by Capital. And this, after the difficult years of 2020, 2021 and 2022, marked by the Covid-19 pandemic and its economic collapse, the closure of China (which recently abandoned its strict zero-Covid) and the destruction of the global economy against a backdrop of the war in Ukraine and the explosion of inflation (which weighs on household purchasing power and weighs on their consumption, including electric cars despite a growing market share). “Disruptions in the production logistics chain, the shortage of parts and the shortage of semiconductors have hit the entire automotive industry,” says Nicolas Domont in this regard.
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Tesla did not survive, especially since China is an important link to its global presence. And Chinese automakers are currently experiencing an upheaval. They will surpass Tesla and other Western automakers in the next few years. “The upcoming intensification of Chinese competition will lower the selling prices of vehicles, which will hurt the margins of Tesla and other manufacturers. Tesla is gradually losing its premium segment, as the offer from among Chinese competitors tends to widen. As the supply of quality electric vehicles increases in the face of demand, sales prices tend to drop. And Tesla’s Model 3 was not spared the unusual this thing”, underlined Nicolas Domont.
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In the fourth quarter of 2022, Tesla disappointed financial analysts with its vehicle deliveries, which were lower than expected, despite aggressive sales price cuts. And the prospects, lowered, are uncertain. For 2023, the specter of recession is likely to weigh on demand for electric vehicles, worrying equity investors.
The latter also allowed the lower involvement of Elon Musk in the management of Tesla, the billionaire was busy correcting on Twitter. And to finance this huge acquisition, 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 in 2022, at an average price of $243.46 per share, for pre-tax proceeds of about $22.93 billion. Overall, Musk has sold nearly $40 billion worth of Tesla stock since an all-time high in November 2021.
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Excluding taxes related to the exercise of stock options, and in the absence of a specific securities disposal tax in Texas, Elon Musk will have to pay a 20% tax on Tesla shares sold in 2022 under the “federal capital gains tax”, said Jean -François Fliti, Allure Finances partner interviewed by Capital. A hope that should force Elon Musk to write a tax check for 4.59 billion dollars to the American tax authorities…
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