Elon Musk’s sale about $5 billion in Tesla Inc. shares is likely just the start of his selling wave.
After Musk made a promise on Twitter, He sold an estimated 4.5 million shares of the electric car maker’s stock, and raising over $US5 billion.
He asked his 63 million Twitter followers whether he should sell 10% of his stake in Tesla days ago and it happend.
The sales, amount to about 3% of Musk’s stake in the company.
The company’s shares fell by16% in the two days after the poll came out in favour of him selling shares, before regaining some ground on Wednesday.
“Much is made lately of unrealised gains being a means of tax avoidance, so I propose selling 10 per cent of my Tesla stock,” Musk tweeted on Saturday.
“I will abide by the results of this poll, whichever way it goes,” he added in another tweet after he posted the vote to his more than 62 million followers.
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?
— Elon Musk (@elonmusk) November 6, 2021
In the poll, almost 58 per cent of 3.5 million votes were cast in favour of him proceeding with the sale.
Musk’s trust sold almost 3.6 million shares in Tesla, worth around $4bn.
He also sold another 934,000 shares for about $1.1bn after exercising options to acquire nearly 2.2 million shares, according to filings with the US stock market regulator.
The motivation for The Monday’s sale was “solely to satisfy his tax withholding obligations to the exercise of stock options,” the filing said. The other filings did not disclose a particular reason for those sales.
Mr Musk has highlighted that he is not paid in cash by Tesla and only has stock.
Part of the latest transaction saw him exercising stock options that he was awarded as part of his pay package in 2012, which is due to expire in August next year.
Musk has one option to buy 22.86 million Tesla shares at $6.24 each, but if he doesn’t exercise the stock option then the shares would become worthless after they expire to a date.
Such transactions set off income taxes, which are typically settled using money raised from immediately selling part of the newly acquired shares.
His move also comes as US Democrats have proposed a so-called “billionaires tax”, which could the richest taxed on “unrealised gains” even if they do not sell any of their stock.
“Elon Musk doesn’t take a salary, he’s paid in big chunks of stock. At some point in time you have to take some of that concentration down,” Art Hogan, chief market strategist at National Securities in New York, told Reuters.
“This is not novel. It just gets more attention because it’s such a high market-cap type, attention grabbing kind of company.”
Musk was Tesla’s largest shareholder in June, owning about 17 per cent of the company, according to data provider FactSet.
He is the world’s richest person, with a net worth of around $282 billion ($386.6 billion), most of it in Tesla stock.
Tesla is the world’s most valuable carmaker, with a stock market valuation of more than $1tn.