Tesla shares slide after Elon Musk proposes selling 10% of his stock in a Twitter poll

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  • In a Twitter poll launched on Saturday, Musk said: “Having a tax avoidance tool has made a lot of unrealized gains lately, so I propose to sell 10% of my Tesla stock. support it?”
  • The billionaire gave people the option to vote “yes” or “no” and pledged to abide by the results of the voting, whatever the outcome.
  • Some 3,519,252 people responded, and 57.9% of them voted “yes”.

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Tesla shares closed down nearly 5% on Monday after CEO Elon Musk asked his Twitter followers if he should sell 10% of his stock in the electric vehicle company.

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It came after Musk asked his 62.5 million Twitter followers to determine the future of a portion of his Tesla holdings.

In a Twitter poll launched on Saturday, Musk said: “Having a tax avoidance tool has made a lot of unrealized gains lately, so I propose to sell 10% of my Tesla stock. support it?”

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The billionaire gave people the option to vote “yes” or “no” and pledged to abide by the results of the voting, whatever the outcome.

Some 3,519,252 people responded, and 57.9% of them voted “yes”.

Musk previously said he was likely to sell “a large block” of his shares in the fourth quarter.

In September, Musk said at the Code conference in Beverly Hills, California, that his marginal tax rate in Tesla would exceed 50% if his stock options expired, and he was already planning to sell soon.

“I have a bunch of options expiring early next year, so … a big block of options will be sold in Q4 – because I have or they will expire,” he said.

Jefferies raised its price target for Tesla shares from $950 to $1,400 in a note on Monday.

“Without ruling out performance risk, Tesla is reaching a position where it can balance affordability and speed, goals that are as important to Elon Musk’s vision as profitability,” wrote analyst Philippe Houchois.

“Tesla ready to pick up stake from major OEMs [original equipment manufacturers], potentially claiming a disproportionate share of the industry’s profit pool in the coming 3-5 years as legacy margins enter the weak EV transition phase.”

Other current and former Tesla board members, including Robin Denholm, Kimbal Musk, Thank you Ira Ehrenparis and Antonio As the company’s stock soared on the Nasdaq Stock Exchange, Tesla shares worth hundreds of millions of dollars have also taken off since October 28.

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

Since Hertz’s announcement, Tesla shares have risen more than 30% and so has Musk’s net worth.

Elon’s tax bill

No matter the results of the Twitter poll, Musk will have started selling millions of shares this quarter. That’s because he’s facing a tax bill of over $15 billion.

Their options expire in August 2022, but in order to exercise them, they have to pay income tax on the gains.

Since options are taxed as employee benefits or compensation, they will be taxed at the top ordinary income levels, or 37% plus 3.8% net investment tax. He would also have to pay the 13.3% top tax rate in California because options were granted and earned most when he was a California tax resident.

The combined state and federal tax rate would be 54.1%. So the total tax bill on his options would, at the current price, be $15 billion.

Musk, who is also CEO of SpaceX and brain-computer interface start-up Neuralink, did not confirm the size of the tax bill. However, he tweeted: “Note, I don’t take any cash salary or bonuses from anywhere. I only own stock, so the only way for me to personally pay taxes is to sell stock.”

In October, Democrats proposed a tax on the investment gains of billionaires annually to help finance President Joe Biden’s $1.75 trillion social and climate package. The so-called billionaire’s income tax would also close a loophole that enabled the ultra-wealthy to indefinitely defer capital gains taxes, a strategy known as “buy, borrow, die.”

Ron Wyden, D, Ore., chairman of the Senate Finance Committee, which formally released the billionaires’ income tax proposal, wrote in a tweet later this week, “Whether the world’s richest person pays any taxes or not , should not depend on its results. A Twitter poll.”

Musk, who has vocally objected to the proposal, gave a befitting reply to Wyden on Sunday.

According to Businesshala Billionaires Index, Musk is currently the richest person in the world, ahead of Amazon founder Jeff Bezos and French retail tycoon Bernard Arnault. The index states that Musk’s net worth is $338 billion.

Of his significant Tesla holdings, Musk has options worth $6.24 for 22,862,050 shares, expiring on August 13, 2022. In 2012, he was given these options.

Businesshala robert frank And Jessica Bursztynski

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