Elon Musk just unlocked $23 billion worth of Tesla stock options — but he can't sell the shares for 5 years

• Elon Musk is set to receive stock options worth $23 billion after Tesla hit three new milestones.
• Musk can exercise the options, but he can't sell the resulting shares for five years.

Elon Musk, who is trying to pull together $39 billion to take Twitter private, just unlocked Tesla stock options worth $23 billion. However, the Tesla CEO can't exercise those options and sell the resulting shares to finance his takeover, as he's barred from cashing in the new stock for five years.

Tesla's first-quarter earnings, released on Wednesday, showed the electric-vehicle company has generated a cumulative $62 billion in revenue and nearly $15 billion in adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) over the past four consecutive quarters.

As a result, Musk hit another three of the 12 milestones outlined in his 2018 incentive program — namely annualized revenue of $55 billion, and annualized adjusted EBITDA of $12 billion and $14 billion, over four consecutive quarters.

There's also a market capitalization requirement for Musk to receive his awards, but Tesla's value has comfortably exceeded the $650 billion requirement for his final milestone for most of the past year.

For each milestone, Musk receives stock options allowing him to buy a tranche of 8.44 million shares at an exercise price of $70.01 per share, costing him $591 million in total.

Assuming Tesla's board certifies that he's achieved the latest three milestones, he will only have to pay $1.8 billion to buy 25.32 million shares — worth $24.7 billion, based on Tesla's closing price of $977 on Wednesday.

In other words, Musk could pocket a net pre-tax profit of $23 billion by exercising the options then selling the resulting stock.

That would be a huge help in financing his Twitter deal, but Musk's incentive plan requires him to hold the shares he acquires through it for five years after he exercises his options (he can only sell stock to cover the cost of exercising and the taxes incurred).

Musk recently offered to buy Twitter for $54.20 a share, valuing the social-media platform at $43 billion. The Tesla and SpaceX chief already owns 9.2% of the company, meaning he needs about $39 billion to purchase the rest.

It's yet to be seen what combination of cash, equity, and debt financing Musk will use, and it's unclear if the deal will go through at all.

It's possible that Musk will look to exercise his latest batch of stock options, and borrow against the resulting shares. But when it comes to a direct influx of cash, it appears he'll have to wait.

Tesla didn't respond to a request for comment from Insider.