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.
Elon Musk
SpaceX’s amended S-1 is sparking a major Tesla merger conversation
A single line in SpaceX’s amended S-1 just sent Tesla stock down 5% in one day.
A single line buried in SpaceX’s amended S-1 filing is doing more to move Tesla’s stock price than anything Tesla itself has announced in months. The clause, disclosed as SpaceX prepares for what could be the largest IPO in Wall Street history, states that the company “may issue a significant amount of equity in connection with future transactions.” While this may be seen as boilerplate language in S-1 filings, the historical ties between SpaceX and Tesla, and with Elon Musk reportedly discussing a possible merger with close colleagues, investors are interpreting it as something closer to a signal.
The concern among institutional investors like Gary Black, managing director of The Future Fund, pointed directly to the amended filing on X, saying it “strongly suggests more SPCX equity will be issued,” which could potentially be used to acquire Tesla. He estimated such a deal could be 28% dilutive to Tesla shareholders since SpaceX would likely command a significantly higher valuation multiple. Black added that institutional investors he knows hate the idea of a combination because they prefer pure plays over conglomerates, which he said “nearly always gravitate to the lowest common multiple.”
The Tesla and SpaceX merger everyone is talking about is quietly building
The bull case runs the math differently. Tesla influencer and retail shareholder advocate AleXandra Merz pushed back on what she called a widespread misunderstanding of how merger-of-equals deals actually work. Rather than simply splitting the difference between two market caps, a merger exchange ratio is negotiated based on relative fair market values, meaning the lower valued company typically sees its stock reprice upward toward the deal value.
Under her model, SpaceX enters at a $2.5 trillion valuation and Tesla at $1.6 trillion, producing a combined entity worth $4.1 trillion split evenly between both shareholder groups. That implies Tesla’s side of the deal would be valued at $2.05 trillion, a gain of roughly $450 billion from its current market cap. She cited Dow-DuPont and CBS-Viacom as historical examples of how markets reprice both companies toward the announced exchange ratio after a deal is unveiled.
What does a Merger of Equals mean to Elon’s compensation packages?
Well, it changes everything.
Enjoy https://t.co/uekCldyITw pic.twitter.com/kolq1C9qTu
— AleXandra Merz 🇺🇲 (@TeslaBoomerMama) June 1, 2026
The SpaceX S-1 amendments also revealed just how much financial infrastructure already binds the two companies together. As Teslarati has reported, SpaceX purchased $697 million in Tesla Megapacks, $131 million in Cybertrucks, and the two companies have shared supply chain resources, and semiconductor fabrication plans since well before any merger conversation became public. A retail poll by Tesla influencer Sawyer Merritt is finding that 36% of respondents do not plan to buy SpaceX shares at IPO and 15.3% saying their decision depends on the valuation.
Do you plan on buying @SpaceX stock at its IPO?
— Sawyer Merritt (@SawyerMerritt) June 1, 2026
Whether the merger happens or not, the amended filing is seemingly moving markets and sharpened a debate that is no longer theoretical. SpaceX is weeks away from trading publicly, and Tesla shareholders are now watching every word of every filing for clues about what Musk plans to do next.
Elon Musk has firmly denied recent media reports suggesting that SpaceX has reduced its target valuation for an upcoming initial public offering.
The denial came directly from the SpaceX and Tesla frontman on his social media platform X, where he responded with a single word, “False,” to a post from ZeroHedge that cited Bloomberg sources.
This swift rebuttal underscores Musk’s ongoing effort to manage speculation surrounding one of the most anticipated market debuts in recent history.
False
— Elon Musk (@elonmusk) May 29, 2026
According to the disputed reports, SpaceX had lowered its IPO valuation goal to at least $1.8 trillion from previous ambitions exceeding $2 trillion.
The claims emerged amid growing anticipation for the company’s confidential S-1 filing, which positions it for a potential public listing as early as June.
Some had pointed to strong revenue growth, particularly from the Starlink satellite internet service, which contributed heavily to the firm’s 2025 figures of $18.7 billion. Yet challenges persist in other areas, including substantial investments and losses tied to ambitious projects like Starship development and artificial intelligence initiatives, which plan to make life multiplanetary eventually.
Musk’s response highlights a pattern in which he actively counters what he views as inaccurate portrayals of his companies’ trajectories.
SpaceX, already valued privately at extraordinary levels, stands as a cornerstone of Musk’s empire alongside Tesla and xAI. The entrepreneur has long emphasized the transformative potential of reusable rockets and global broadband access, factors that fuel investor enthusiasm despite operational hurdles.
By rejecting the valuation downgrade narrative, Musk signals confidence in SpaceX’s fundamentals and its readiness for public markets on terms favorable to its long-term vision. People have been waiting a very long time to invest in SpaceX, and the valuation, as well as the introductory share price, is not going to need adjusting.
They’ll have plenty of suitors.
This episode reflects broader dynamics in the technology sector, where rumors often swirl around high-profile entities. Musk’s direct engagement with media narratives serves to maintain transparency and control the narrative around his ventures.
As SpaceX prepares for greater scrutiny in public markets, the founder’s denial reinforces optimism about its prospects. Supporters argue that the company’s innovative edge positions it for enduring success, far beyond short-term valuation debates. With the denial now public, attention turns to forthcoming regulatory filings that could provide clearer insights into SpaceX’s strategy and financial health.
The coming weeks promise to reveal more about how SpaceX will transition into a publicly traded powerhouse.
Elon Musk
The Tesla and SpaceX merger everyone is talking about is quietly building
Tesla and SpaceX may be closer to merging than Wall Street or either company is admitting.
Elon Musk has reportedly discussed merging Tesla and SpaceX with people close to him, according to CNBC, which cited sources familiar with the conversation. Tesla employees have long expected such a transaction and the topic is openly discussed internally, according to internal sources. With SpaceX is days away from kicking off its Wall Street roadshow for what could be the largest IPO in market history, this would be the first time the company will have public market currency to execute a stock-for-stock deal with Tesla.
The financial logic for a merger would make sense. A combined SpaceX and Tesla would create a conglomerate spanning rockets, satellites, electric vehicles, AI infrastructure, and energy storage valued at roughly $3.35 trillion to $3.6 trillion based on SpaceX’s IPO target range and Tesla’s current market capitalization. The two companies are already more intertwined than most people realize. SpaceX bought $697 million worth of Tesla Megapack systems for xAI data centers and $131 million worth of Cybertrucks. Tesla invested $2 billion in xAI, which subsequently merged with SpaceX. Past transactions also include Tesla selling solar equipment and parts to SpaceX, and SpaceX helping with Cybertruck materials.
Will Tesla join the fold? Predicting a triple merger with SpaceX and xAI
Musk himself signaled where this was heading in November 2025 when he posted on X, “My companies are, surprisingly in some ways, trending towards convergence.” Tesla and SpaceX announced a joint semiconductor fabrication facility in Austin called Terafab on the Gigafactory Texas campus, covering two advanced chip factories, with one serving Tesla’s AI needs for vehicles and Optimus robots, the other targeting space-based data centers under SpaceX’s infrastructure vision.
Wedbush analyst Dan Ives places the probability of a merger at 80% to 90% with a target completion in the first half of 2027. The mechanics of a deal became possible the moment SpaceX filed its S-1. Legal experts said a merger likely would not spark antitrust issues but would raise concerns among shareholders in each company, with questions around which company would be the parent, how a stock swap would take place, and who determines the appropriate price. Musk holds about 20% of Tesla’s equity but controls 85.1% of SpaceX’s voting power through a super-voting share class, meaning he would largely be negotiating the terms with himself.
Not everyone is convinced the timing is imminent. Traders on Kalshi place only 33% odds that a merger will happen before May 2027. The more immediate concern for Tesla shareholders is whether the SpaceX IPO pulls capital and Musk’s attention away from Tesla before any merger consolidates the upside for both.
What is clear is that the structural groundwork is already being laid. The Terafab announcement, the xAI merger, the shared supply chain, the cross-company balance sheet transactions, and now the IPO all point in the same direction. Whether the merger follows in 2027 or later, the two companies are already operating more like divisions of a single entity than independent competitors.
SpaceX’s amended S-1 is sparking a major Tesla merger conversation
Tesla’s European Comeback: Registrations soar in May as recovery gains momentum
