Investor's Corner
Debunking the story that Elon Musk “kept cash” from the recent stock offering
On Monday May 23, 2016, Tesla Motors e-mailed to TSLA registered investors a link to Elon Musk’s Form 4 SEC Filing, a.k.a. the Statement of Changes in Beneficial Ownership, detailing the transactions that are part of the recent stock offering that relate to Elon Musk.
Source: Tesla Motors
The Form is available also at Tesla Motors Investors website.
I will go through the major details shown in the form to understand how the transactions were executed. For the inquiring minds, the various SEC codes listed in FORM 4 can be found here.
First an assumption: prior to the offering and the changes in beneficial ownership of the listed securities, Elon Musk held 29,579,342 shares of stock in TSLA.
The first and second transactions (Table I, column 1, line 1 and 2) report the exercise of stock options (options that were awarded to Elon in previous years as part of a Non-Qualified Stock Options plan) to acquire 5,503,972 shares of Tesla’s common stock (2,147,986 + 3,355,986 shares). The options were originally awarded at $6.63, and Elon paid $36,491,334 or about $36 million to exercise them. After this purchase, Elon owned at total of 35,083,314 shares (Table I, column 5, line 2).
While the original offering was supposed to be priced at about $204 per share, the eventual offering price was raised to $215 per share. At the $215 stock value at the time of the offering, the value of the acquired shares was a whopping $1.18 billion!
Before actually paying for the option exercise transactions, Elon did two things.
First it disposed of 1.2 million shares as a “bona file gift to charity” (Table I, line 3 and Explanation of Responses (3)). This gift reduced Elon’s shares down to 33,883,314 shares (Table I, column 5, line 3).
Second, Elon disclosed that he intended to sell 2,782,670 of the purchased shares in the “registered offering solely in order to pay income tax related to these stock option exercises” (see Explanation of Responses (2) in FORM 4). The sale reduced Elon’s shares further down to 31,100,644 shares. At $215 / share, Elon Musk’s Tesla shares are worth a bit over $13 billion.
Interestingly, if these were Incentive Stock Options (ISO), the ones usually awarded to Executives, vs. Non-qualified Stock Options (NSO), usually awarded to regular employees, these options would have received special federal tax treatment, and there would be no taxable event reported at exercise, except for any exercised shares that were sold immediately after the exercise. But as one can see in Table II, Elon received “non-qualified stock options” like any other employee, that do not qualify for special tax treatment.
The gain or “bargain element” in a stock option exercise is calculated by subtracting the exercise price ($6.63) from the market price ($215) of the company stock on the date the option is exercised. So the gain per share is $208.70. The total bargain element (gain) in the options exercise transactions is $1,148,679,000 or about $1.14 billion, which is the “taxable gain.”
For the 2,782,670 shares that Elon sold in the registered offering, Elon collected $598,274,050 or about $580 million after accounting for the price paid for the shares. Since these shares were sold immediately after exercise, the gain will be reported as a short-term capital gain and will be subject to tax at ordinary income tax rates. Assuming 39.6% ordinary federal income tax rate, and a 12.30% top individual rate for California, Elon would have to pay $596 million in tax, or 51.9% of the “taxable gain.”
Notice that the $580 and $596 million numbers above are close enough for the company to state in the FORM 8-K filing that “Mr. Musk will owe a significant amount of taxes from exercising these stock options and will fund this task obligation by selling only the amount of shares needed to do so.”
But we are not done. The rest of the stock exercised by Elon Musk, 2,731,302 shares, can be treated as long-term capital gain (with better tax treatment, likely at the 20% long-term capital gain rate, rather than at the 39.6% personal income tax rate) if the stock is held for 12 months after exercise. Assuming that Elon is smart (I think he is), he will wait, to get a combined Federal + California 32.3% tax rate, resulting in an additional $184 million in taxes (2,731,302 times $208.70 times 32.3%).
Finally, we need to consider the gift of 1.2 million shares of Tesla’s common stock given to charity (Table I, column 1, line 3). By donating shares, Elon avoids paying the capital gains tax, which would have to be paid if the shares were first sold and then the cash proceeds donated to charity.
Moreover, Elon can get a tax deduction for the current fair market value of the gifted shares. In general, the amount of the deduction is limited to 20%-30% of the adjusted gross income, but one can carry forward amounts above that for up to five years. Without knowing Elon’s adjusted gross income, it is difficult to guess what the deduction would amount to. The fair market value of the donated shares is $250 million. That would be the best case scenario for a charitable deduction, which is extremely unlikely, while 20% of the taxable gain is more likely ($218 million).
Summarizing the transactions:
- Cost of exercising options: $36 million
- Taxes on short-term capital gain for shares sold at offering: $596 million
- Taxes on long-term capital gains for shares held 12-months: $184 million
Total outlay: $ 816 million
- Registered offering sale: $580 million
- Gifted shares tax deduction (max): $250 million, (likely): $218 million
So after all is said and done, Elon will still owe Uncle Sam between $18 and $236 million. I have seen reports from “TSLA bears” (or TSLA haters, same thing) indicating that Elon would actually “keep cash” on this sale.
Obviously he does not, and I would expect that he would eventually have to sell a portion of the remaining $1.5 million (to be exact 1,521,302 shares) from the offering that Elon is not selling or donating to charity, to cover the additional tax, unless he’s got cash in the bank to pay for it.
This offering dilutes the total outstanding shares of TSLA with an additional 1.4 million from Tesla Motors and the 5.5 million from Elon Musk (for a total on 6.9 million new shares diluting the TSLA public pool of shares), while Elon adds about 1.5 million to his total, ending with about 31 million shares (to be exact 31,100,644). So Elon adds some shares but loses a bit in Tesla ownership percentage, from 26.2% to 22.7%.
Technical Analysis
Looking at this week TSLA action, we are now after my predicted breakout, looking at bullish pay-day-cycles (6 consecutive green Heikin Ashi bars), the MACD gone positive, and the MACD moving averages “crossed to the bulls”.
Source: Wall Street I/O
We are coming close to an important point: the stock price is advancing toward the 200-day moving average (around $221.90), which will act as “resistance”. If the stock fails to cross the 200-day moving average, it would usually move down and fast afterwards (“bounce” off the average); this morning it traded as high as $220.75 and “bounced”. If otherwise it eventually crosses the 200-day moving average, we will have an additional bullish indicator and the stock will be header for new tops.
I entered my option trades last week (Sept. 215 calls), before the breakout and have added and cashed in already once to take profits. I have also progressively moved up my conditional stop from 205, to 210 and 215, to protect my profits, and will likely move it even higher as the stock approaches the 221 level and tests the resistance. If the stock crosses the 200-day moving average, I will add again to my TSLA calls holdings, as I will have 4 bullish indicators flying high. Obviously not a good time for short sellers in $TSLA.
Investor's Corner
Tesla has a Cybercab problem nobody saw coming
Tesla’s Cybercab line now builds robotaxis faster than Tesla can deploy them, Lars Moravy says.
Tesla’s Cybercab line in Texas can now build the two seat robotaxi faster than the company can put it into service, according to Lars Moravy, Tesla’s Vice President of Vehicle Engineering. “We don’t run every day because the line can run so fast. It’s currently outpacing our deployments,” Moravy said in a new Cybercab deep dive from Munro Live. “So, it’s a bit of a race right now. Who’s going to go faster? Right now the manufacturing line’s ahead.”
Tesla’s official Robotaxi account shared a Cybercab analysis video on X on Monday, calling it a “Cybercab engineering deep dive.” Moravy’s comments go further than what he told analysts on the Q3 earnings call last week, when he said the Cybercab line’s listed capacity of more than 125,000 units a year undersells what it can actually run.
The tour shows where that speed comes from. Tesla’s unboxed process splits the Cybercab into front, rear, side and center modules that are built and tested on their own before they meet on a short final line. That final line has just 25 fully automated stations, which Tesla’s team estimated is a fifth to a tenth of what a Model Y needs. The full line is about 78% automated, the framing line is already at 100%, and the layout uses roughly 50% less floor space per vehicle. The stated goal is “100% automation in 10 second cycle time,” or one finished Cybercab every 10 seconds.
Tesla also deleted the paint shop. Only the side modules are coated, and the exterior panels get their color inside the molding machine. Engineers said the car is designed to run at least 500,000 miles, which matters for a vehicle that will spend most of its day carrying riders.
The battery got the same treatment. The Cybercab uses an 88S6P pack of 4680 cells in a steel enclosure, a first for Tesla, with each module potted separately so a single failed module can be swapped instead of the whole pack. Wireless battery management boards replace a wiring harness, and new contactors are fast enough to drop the pyro fuse entirely. Tesla’s battery director graded the pack an A minus, compared with a D for the Model Y structural pack and a B minus for Cybertruck. Up front, the drive unit runs an 11:1 gear ratio versus roughly 9:1 on most Teslas, since the Cybercab does not need a high top speed.
Cybercab engineering deep dive — Robotaxi (@robotaxi) October 26, 2026
The deployment side is now the bottleneck Moravy described. Tesla had more than 50 Cybercabs working the Formula 1 weekend in Austin, and Texas records show 463 Cybercabs registered. Tesla said on its earnings call that Cybercab service will launch in Dallas next month, and Moravy said the company is aiming to get Cybercabs to customers by the end of 2026. Every unit built so far has gone into Tesla’s own fleet since the line moved into volume production in April.
Munro Live also asked when it could get a Cybercab to tear down. Tesla’s answer: “Not yet.”
Tesla (NASDAQ: TSLA) reported its earnings for the third quarter of 2026, marking a reasonable performance on the various financial metrics. Tesla still plans to hold a call that will field investor questions at 5:30 p.m. ET, 4:30 p.m. CT.
Here’s where Earnings came in:
- Total Revenues: $28.046 reported vs. $28.34B expected
- Non-GAAP EPS: $0.48 reported vs. $0.45 expected
- Operating Margin: 2.6 % reported vs. 2.5% expected
- Operating Income: $718M reported vs. $721M expected
- Free Cash Flow: $1.531B reported vs. ~-$4.51B expected
Tesla $TSLA Earnings Results:
Revenues: $28.046B
Non-GAAP EPS: $0.48
Operating Margin: 2.6%
Operating Income: $718M
FCF: $1.531B— TESLARATI (@Teslarati) October 21, 2026
Major Takeaways
Full Self-Driving (Supervised)
“FSD (Supervised)⁴ attach rate continued to grow, reaching over 75% of new vehicle deliveries in North America – our most mature market – a nearly twenty percentage point sequential increase. We believe that FSD is driving demand in markets where it is available, and we continue to work with regulators to get it approved in other markets.”
Tesla Semi
“We began volume production of Tesla Semi, our Class 8 heavy-duty truck. The top variant can go 500 miles at full 82,000 lbs gross combination weight while achieving an efficiency of 1.7 kWh/mile. That efficiency allows the Tesla Semi to use a third of the energy used by a comparable diesel truck to haul the same payload. In a transportation market where energy is one of the largest components of total cost per mile, this will provide a meaningful advantage to Tesla Semi operators.”
SI Compute
“We plan to reach 400 MW of SI training compute by the end of the year, supporting the development of both vehicle and humanoid robot autonomy software. Additionally, we continued construction for the Austin Fab, where we plan to start commissioning equipment in 2027.”
Robotaxi
“We began deployment of Cybercab into our Robotaxi fleet in Austin. We reached nearly two million cumulative unsupervised miles for our Robotaxi service as of the end of the quarter. Operating hours in Austin are now 6am to midnight, and we expect to reduce wait times via increased fleet supply and improvement of Robotaxi orchestration algorithms. Grok is available in Cybercab with access to Grok Bot and Connectors, which allows users to manage their inbox, calendars, files, chats and tasks – all hands free via voice command – making Cybercab a mode of transport, a productivity space and, with our entertainment options, a second living room.”
Interested in ordering a Tesla? Use my referral code for three free months of Full Self-Driving (Supervised) here.
Tesla (NASDAQ: TSLA) reports its earnings for Q3 today. Here’s what to expect, as the company will reveal its balance sheet after the market closes on Wednesday.
Tesla already reported deliveries just after Q3 ended, and it demolished Wall Street consensus estimates of roughly 462,000 vehicles. Tesla delivered 486,532 cars in the third quarter, which was a big beat, but was down 2.1 percent from the same quarter last year. Energy storage deployments were 13.7 GWh, up year-over-year.
Tesla showrooms picked clean ahead of Q3 end as demand looks strong
For the quarter, analysts have already compiled their predictions for what Tesla will report this afternoon:
- Total Revenues: $28.34B
- Non-GAAP EPS: $0.43
- Operating Margin: 2.5%
- Operating Income: $721M
- Free Cash Flow: ~-$4.51B
Here are a few things we are looking forward to hearing about on the call:
Automotive Gross Margin and Overall Profitability
This was 16.3 percent in Q2, down from 19.2 percent in Q1, and was impacted by warranty charges and some fading regulatory credits. Consensus implies overall gross margin near 18 percent, but a miss here would potentially reinforce concerns about pricing pressure on its vehicles.
Pay attention to energy storage margins as well, especially since Tesla missed GWh expectations, although it was still a strong quarter.
Robotaxi/Cybercab, Unsupervised FSD, and Optimus Progress
The Say questions from retail investors usually focus on these types of projects, and this quarter is no different. Scaling the Cybercab fleet beyond Austin amid the open NHTSA safety review, timeline for Unsupervised FSD in customer cars, Robotaxi unit economics, and Optimus cost per unit plus when it could start generating revenue, are all things to be looking for.
Any concrete timelines or regulatory path details will likely move the stock more than the near-term numbers. SpaceX merger speculation, which was detailed during SpaceX’s earnings call last night, may also surface, although the key details were shared last night.
Elon Musk just confirmed the Tesla and SpaceX merger step everyone was waiting for
Say Investor Questions
- How does the Cybercab fleet scale past Austin, and what’s the regulatory path outside Texas given NHTSA’s open safety review?
- When can we anticipate FSD unsupervised in customer cars?
- When will the CyberCab be available for customer purchase/ownership?
- What’s the unit economics per paid robotaxi mile, and how does it compare to the thirty-cent target?
- Tesla has acknowledged that HW3 vehicles cannot support unsupervised FSD. When will owners know whether they can upgrade their hardware for free, and when will Tesla provide a clear plan?
The full Earnings Call will be streamed this evening after market close around 5 p.m. this evening.
Tesla’s Cybercab battery design could make robotaxis even cheaper
Starlink is ‘biggest competitive advantage,’ but it’s temporary, United CEO says
