Tesla stock plummets after Elon Musk’s Twitter poll backs his intention to sell shares
The majority of the billionaire’s 62.5 million Twitter followers think he should sell 10% of his ownership in an electric car company.
Tesla’s Frankfurt-listed shares tumbled about 9% in early trading Monday as investors braced for Elon Musk’s proposed sale of around a tenth of his stake in the electric carmaker following his Twitter poll.
Musk, the world’s richest man, tweeted on Saturday that if users of the social media network supported the idea, he would sell 10% of his stock.
More than 3.5 million individuals voted yes in the survey, with 57.9% saying yes.
Musk previously stated that he would have to execute a substantial number of stock options in the next three months, resulting in a significant tax burden. Selling some of his shares may be able to help him pay his taxes.
After the vote, Musk said, “I was prepared to accept either outcome,” Speculators were likely to try to outrun his selling, according to market participants.
According to Reuters calculations, Musk’s shareholding in Tesla was around 170.5 million shares as of 30 June, and selling 10% would be worth close to $21 billion based on Friday’s closing.
Musk owns a 23 percent interest in Tesla, the world’s most valuable car firm, including stock options. According to Refinitiv Eikon data, Tesla insiders sold $259.62 million worth of shares in the three months ending November 4, excluding sales of indirectly held shares.
Musk’s straw poll comes after US Senate Democrats proposed taxing billionaires’ stocks and other tradable assets to help finance President Joe Biden’s social spending plan and close a loophole that has allowed them to avoid paying capital gains taxes indefinitely.
“The last thing you do when offloading a massive exposure is to reveal your hand,” said Chris Weston, the head of research at broker Pepperstone in Melbourne. “The buyers tend to step away when you have an overhang like this, but this is no ordinary story and is Musk’s way of getting back at the proposal to tax the elite with gains on unrealized profits.”
Late in October, Tesla became the fifth US business to surpass a trillion dollars in market capitalization, joining Apple, Microsoft, Amazon, and Alphabet.
“I’d be looking for clients to flip to shorting fairly aggressively, although hold periods would be very short-term in nature,” Weston added.