The automotive and tech blogs are aflutter Saturday with news that Elon Musk has gobbled up another chunk of Tesla stock — this time at a discount.
Musk exercised and held a stock option this week that saw the multi-billionaire increase his ownership of Tesla Motors by 532,000 shares. In total, those shares are worth over $101 million as of the last closing price of $191.20/share.
Here’s where the discount comes in: Musk’s option dictated a price pegged to the share value as of Dec. 4, 2009, before the automaker went public, of $6.63/share — or just over $3.5 million.
Sounds like Elon got a stellar deal. But does any of it matter? Is owning 1/5th of Tesla a big deal?
Surely, picking up many fistfuls of shares at a discount and paying out of your own pocket to hold those shares is noteworthy; Musk is $50 million lighter now thanks to the taxes and fees associated with the decision to hold.
And yes, this does increase Musk’s ownership of the company to 22 percent — or a rounded 1/5th, as one outlet is reporting today.
Yet, there are 130.95M Tesla shares outstanding, according to the most recently available numbers. An extra 532,000 shares is a drop in the financial bucket in comparison. To be precise, it equals 0.4 percent of the total outstanding stock volume. This isn’t a massive increase in ownership.
Also, if those 532,000 shares are 0.4 percent of the total outstanding stock, and 22 percent (Musk’s current holding) minus 0.4 percent (what Musk just bought) equals 21.6 percent (what Musk owned before the purchase) … why is AutoBlog reporting Musk now owns 1/5th of Tesla? Musk already owned 1/5th — erm, 21.6 percent — of Tesla Motors.
[Note: To be fair to AutoBlog, the “one-fifth” myth started at TechCrunch.]