Elon Musk urged to offload 10% of Tesla stock following Twitter poll
Elon Musk has committed to selling 10% of his stake in Tesla, sending the stock lower, after a Twitter poll voted in favour of the move.
Musk launched the poll in response to a Democrat proposal for a so-called billionaire’s tax. Under the plans, billionaires - who have been criticised for paying seemingly minimal taxes when compared to their extensive wealth - could be taxed on unrealised gains when the price of their shares goes up, even if they do not sell stock.
It is thought the tax would hit about 700 billionaires in the US
Musk tweeted on Saturday: "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?"
More than 3.5m votes were cast by the time the poll closed at 2000 GMT on Sunday, with 42.1% against and 57.9% in favour.
When he launched the poll, the Tesla chief executive tweeted that he would abide by the results, adding: "Note, I do not take a cash salary or bonus from anywhere. I only have stock, thus the only way for me to pay taxes personally is to sell stock."
As at 1130 GMT, the stock was down 5% in pre-market trading. Musk has yet to comment on the results of the poll.
A sale would see him dispose of around $21bn of stock, based on Friday’s closing price
Musk - one of the world’s richest men - has an option to buy 22.86m Tesla shares at $6.24 each. The option expires in August 2022, and Musk has previously said he would likely pay taxes of over half the gains he would make from exercising options.
Neil Wilson, chief market analyst at Markets.com, said: "Musk was due to start selling soon anyway, as he faces a monster tax bill on some of his stock options. And since he takes no salary or bonus from being Tesla chief executive - as he likes to remind us - the only way to cover would be to sell some shares. Seems fair enough, but does it need all the FinTwit [financial Twitter] showbusiness?
"Musk would be aware that advertising his plans to sell $21bn in stock would lead to a fall. But he probably reckons on it being short term in nature, or doesn’t particularly care at these insane valuations.
"This way he controls the narrative of what amounts to a pretty massive stock sale, which is ultimately at the behest of the taxman.
"It’s hard to say if it’s manipulation, but it’s not normal."
Musk has previously fallen foul of the US Securities and Exchange Commission over his Twitter usage. In 2018 he tweeted that he had "secured funding" to take Tesla private, but the SEC ruled that financing was not in place and the tweet had therefore violated securities law. Musk settled the lawsuit but did not admit wrongdoing.