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- Shares in Tesla posted their worst daily fall in more than a year on Tuesday after chief executive Elon Musk hinted at a potential sale of his stake
- On Saturday, Mr Musk asked his Twitter followers if he should sell 10 per cent of his stake in the electric vehicle maker
- His poll follows a proposal by US Senate Democrats to tax stock holdings of billionaires to help finance President Joe Biden’s social spending plan
- Last month, Tesla zoomed past a $1.36 trillion market cap, leading four former and current Tesla board members to sell almost $1.36 billion worth of shares
Shares in Tesla posted their worst daily fall in more than a year on Tuesday, as investors dumped their holdings after chief executive Elon Musk hinted at a potential sale of his stake.
The upheaval comes after Musk asked his Twitter followers over the weekend if he should sell 10 per cent of his stake in the electric vehicle maker. Just under 58 per cent of respondents said they support the sale, and Mr Musk said later the same day that he “will abide by the results of this poll, whichever way it goes”.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
— Elon Musk (@elonmusk) November 6, 2021
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Mr Musk’s poll follows a proposal by US Senate Democrats to tax stock holdings of billionaires to help finance President Joe Biden’s social spending plan and fill a loophole that allowed the rich to indefinitely defer capital gains taxes.
Previously, Mr Musk said he would need to exercise a large number of stock options in the next three months, which would create a sizeable tax bill. Selling some of his stock could free up funds to pay the taxes.
“I only have stock, thus the only way for me to pay taxes personally is to sell stock,” Mr Musk also wrote on Twitter.
Tesla shares are up nearly 50 per cent over the last 12 months, with a series of record highs triggered in part by a large order for cars placed by rental car firm Hertz.
Late last month, Tesla zoomed past a US$1 trillion (A$1.36 trillion) market capitalisation, leading four former and current Tesla board members — including Musk’s brother Kimbal Musk — to sell almost US$1 billion (A$1.36 billion) worth of shares.
The share price surge, according to Michael O’Rourke of Jones Trading, means “Musk has used the now moot political debate on billionaire taxes as an opportunity to monetise billions of his wealth without reflecting a negative view on the company or its share price”.
“It is highly unlikely that there are institutional buyers for Tesla shares at current prices.”
On Friday, Kimbal filed to sell 88,500 Tesla shares worth US$109 million (A$148 million), just a day before Elon Musk tweeted about his 10 per cent stake.
While the stock sale could solve a major headache for Musk, his tweets raised questions about a potential violation of his settlement with the US Securities and Exchange Commission (SEC). He was recently fined US$20 million (A$27.13 million) by the SEC for tweets posted in 2018 and was required to step down as Tesla chairman.
