Tesla Takes A $61 Billion Hit After Elon Musk’s ‘Bizarre’ Poll Teasing $21 Billion Stock Sale


Topline

Tesla shares fell sharply Monday morning after Chief Executive Elon Musk, the world’s richest person, said he would abide by the results of his Twitter poll and sell 10% of his stake in the electric-carmaker, stoking investor concerns over how prices could react to such a massive sale, but one expert says the largely expected transaction should be “digestible” for the stock—even if unprecedented.   

Key Facts

Tesla stock fell as much as 5% shortly after the market opened Monday to a price of $1,133, representing about $61 billion in market value lost since Friday’s close. 

Triggering the morning decline, Musk on Saturday called on Twitter users to help decide whether he should sell 10% of his roughly 23% stake in Tesla in response to a short-lived proposal in Congress that would have taxed billionaires’ unrealized stock gains to help curb tax avoidance among the ultra-wealthy.

The poll closed Sunday with nearly 58% of the more than 3.5 million respondents voting in support of the proposal, with Musk pledging in a separate tweet to “abide by the results of [the]

In a Monday note, Wedbush analyst Dan Ives called the poll “bizarre” and surprising, but said investors should not be “overly concerned about” the possible transaction because it was already expected Musk would sell about 6% of his ownership stake this year to help pay a big tax bill coming due from his 23 million stock options awarded in 2012 and set to expire in August 2022. 

Ives went on to say it’s likely better Musk “rip the band-aid off now” and sell the portion of stock rather than letting the possibility linger over the next year and risk ongoing volatility. 

Musk’s fortune tanked by about $13 billion Monday morning, but the 50-year-old is still worth $305.5 billion, about $100 billion more than the world’s second-richest person, Amazon founder Jeff Bezos.

Crucial Quote 

“With a tax bill that we calculate at north of $10 billion, selling stock over the coming months is not a surprise, although holding a Twitter poll to sell 10% of his stock is another bizarre soap opera,” Ives said. “But ultimately it’s a digestible number we are not overly concerned about.”

Chief Critic

“Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” Sen. Ron Wyden (D-Ore.), who helped draft the proposed billionaire tax, tweeted Saturday. “It’s time for the Billionaires Income Tax.”

Tangent

Since Tesla went public on the Nasdaq exchange in 2010, Musk has only sold stock twice. In July 2010, Musk sold slightly more than 1.4 million shares for $24 million, and in 2016, he sold another 2.7 million shares for about $593 million. 

Big Number

$1.2 trillion. That’s Tesla’s market value Monday morning. Despite slipping about 5% from an all-time high on Thursday, shares are still up 61% this year, compared to 27% for the S&P 500.

Further Reading

Here’s How Much Elon Musk Would Pay In Taxes If He Sells 10% Of His Tesla Stock (Forbes)

Elon Musk’s Twitter Followers Vote For Him To Sell 10% Of Tesla Stock (Forbes)

Elon Musk Says He’ll Sell 10% Of His Tesla Stock If Twitter Users Vote For Him To (Forbes)





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