Time magazine and the Financial Times this week named Tesla founder and CEO Elon Musk as their person of The Year for 2021.
It should have been twit or tweeter of the year for a CEO who at times seems to verge on the narcissist, with an overlay value-destroying tendencies which is odd given the 2,300% rise in the value of Tesla in the past five years, much of which is down to his vision for batteries and electric vehicles.
Musk has been gonged for the success in building the Tesla battery and electric vehicle business and the SpaceX rocket company and yet the at times gushing accolades for those considerable achievements are being overtaken by the current slide in Tesla shares as Musk has engaged in a massive series of stockmarket trades involving exercising millions of options and selling the shares.
Both Time and the FT are supposed to be modern day media organisation believing that so-called ESG – environment, social and governance – principles rank equally with profits, revenue and personal enrichment (if not higher in the case of the latter).
No such thing with Musk – since his now notorious tweet on November 7, wondering whether he should sell 10% of his Tesla stake and asking his followers on Twitter for guidance – the poll attracted more than 3.5 million votes and 57.9% of people voted “yes”, he has sold or converted millions of dollars’ worth of options (most recently on Monday) and sold billions of dollars’ worth of shares.
As we shall see that tweet on November 7 was a set-up, Musk had already signalled in late September his intention of selling shares and converting some of his options in the December quarter.
But while the option exercising and share selling and buying has buttressed his personal wealth, it has driven down the Tesla share price and made poorer (relatively speaking, it must be said) other shareholders and supporters who own Tesla shares
Since November 7, the value of Tesla shares has plunged more than 22% from a high of $US1,243.49 (valuing the company at $US1.25 trillion) to $US975.99 (after falling to $US958 on Tuesday) on Wednesday.
That has seen the value of the company as a whole drop from $US1.243 billion to around $US975 billion – a drop of $US268 billion – which should make Musk Loser of The Year.
And yet that seemingly didn’t rate very highly.
On Monday Musk was at it again. According to Reuters he sold another 934,091 Tesla shares worth $906.5 million and also exercised stock options to buy 2.134 million shares of Tesla at $US6.24 each. Which in effect means he paid $US13.3 million to get hold of Tesla shares worth more than $US2 billion. Now that’s money-making on a grand scale.
The 22% plus fall since early November has cut the rise in Tesla shares this year to around 36% – still much better than the wider market, but unless there is a significant surge in 2022, it won’t be repeated again.
But digging into Tesla filings show his November 7 tweet asking for the poll on selling his shares was a sham.
The SEC filings show that the sales had been set in a so-called trading plan company insiders can file with the uS Securities and Exchange Commission detailing planned sales, purchases and exercise of options and other securities, so as to avoid the appearance of insider trading.
Musk filed his in September, as CNBC explained: “The latest insider transactions by the Tesla chief and centibillionaire were part of a “Rule 10b5-1” trading plan dated September 14, the filings said. This type of plan allows company insiders to execute trades in their own company’s stock for a set, future date.
“Musk, who is the wealthiest person in the world and who was just named Time magazine’s 2021 Person of the Year, still has millions of stock options that he needs to exercise by August 2022. He revealed at the 2021 Code Conference on September 28 that he would likely sell a large chunk of stock in the fourth quarter.”
Smart well-read investors have been waiting for his selling surge, but the mugs on Twitter weren’t.
And for all the guff on ESG that various media organisations put out, the fact that Musk moved from high tax California to no income or capital gains tax Texas also seems not to have played a big part in the vetting for Person of The Year (which is a rarefied version of Dog of The Week that so many cub reporters wrote early in their journalism days and which had more credibility that the awards from Time and the FT).
The personal domicile shift will benefit Musk to the tune of billions of dollars in cash. He is the richest person in the world and is busy converting his capital gains to tax free income and assets. That merely makes him the richest man of the year and nothing more.