Tesla shares slide 5% after Elon Musk proposes selling 10% of his stock

Tesla Inc Chief Executive Elon Musk on Saturday asked his 62.5 million followers on Twitter in a poll if he should sell 10 percent of his Tesla stock.

The world’s richest person had previously said he could face a “massive” tax bill this year as he has to exercise a large number of stock options coming due next year.

“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 a stock,” Musk said on Twitter on Saturday.

Tesla’s shares listed in Frankfurt were down 7% at 986 euros at 0827 GMT. Its U.S.-listed shares are up 73.2% so far this year, compared with a 23.9% increase in the Nasdaq Composite index.

Musk had previously said he would have to exercise a large number of stock options in the next three months, which would create a big tax bill. Selling some of his stock could free up funds to pay the taxes.

“I was prepared to accept either outcome,” Musk said after the voting ended. Market participants expected speculators would try to front-run his selling.

In September, Musk said at the Code Conference in Beverly Hills, California, that his marginal tax rate will be over 50% when his stock options expire at Tesla, and that he was already planning to sell soon.

“I have a bunch of options that are expiring early next year, so … a huge block of options will sell in Q4 — because I have to or they’ll expire,” he said.

Elon Musk

Other current and former Tesla board members, including Robyn Denholm, Kimbal Musk, Ira Ehrenpreis, and Antonio Gracias have also offloaded hundreds of millions of dollars worth of Tesla stock since Oct. 28, as the company’s stock soared on the Nasdaq stock exchange.

Shares climbed after Tesla posted a record third quarter and car rental company Hertz announced that it was ordering 100,000 Tesla vehicles for its fleet. Musk waited for a week after Hertz made its announcement to say that Tesla had not in fact signed a contract with the company yet. Prior to that statement, he taunted investors who were short shares of Tesla on Twitter, writing: “Tesla Hertz shorts.”

Since the Hertz announcement, Tesla shares have risen considerably and so has Musk’s net worth.

Musk’s straw poll follows a proposal by U.S. Senate Democrats to tax billionaires’ stocks and other tradeable assets to help finance President Joe Biden’s social spending agenda and fill a loophole that has allowed them to defer capital gains taxes indefinitely.

“The last thing you do when offloading a massive exposure is to reveal your hand,” said Chris Weston, 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.”

Tesla breached a trillion dollars in market capitalization late in October, becoming the fifth U.S. company to join a club that includes 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. 

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.

0/5 (0 Reviews)
0/5 (0 Reviews)
0/5 (0 Reviews)
Scroll to Top