Tesla shares drop more than 4% after Elon Musk’s Twitter poll

The billionaire businessman had asked his 62.8 million Twitter followers to vote on whether he should sell 10% of his Tesla holdings

Electric vehicle maker Tesla's shares fell as much as 4.5 per cent at the start of trading on Monday after Elon Musk's Twitter followers largely voted in favour of the company’s billionaire chief executive and co-founder selling 10 per cent of his holdings.

The stock of the fifth-largest publicly traded company in the US dropped nearly 7 per cent in premarket trading on Monday and was trading at $1,167.96 at 9.50am New York time.

Mr Musk had asked his 62.8 million followers on Saturday to vote in a poll on whether he should sell 10 per cent of his Tesla holdings. Voting closed on Sunday.

“Much is made lately of unrealised gains being a means of tax avoidance, so I propose selling 10 per cent of my Tesla stock,” he had said on Twitter.

“I will abide by the results of this poll, whichever way it goes."

As of June 30, Mr Musk holds nearly 170.5 million shares of Tesla, valued at almost $200bn. His 10 per cent shares will be worth nearly $20bn.

The world’s richest person proposed this move in a tweet citing discussions about wealthy people hoarding unrealised gains to avoid paying taxes.

Mr Musk was calling into question the Democrats' “billionaires' tax”, which seeks contributions from America's most affluent by taxing their “tradable assets".

The proposed tax is expected to help fund US President Joe Biden’s ambitious social policy and climate change legislation.

“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 stock,” Mr Musk said.

“It seems that the crowd thinks he [Mr Musk] should sell some stock and pay taxes," Neil Campling, co-head of Mirabaud Securities' Global Thematic Group, told The National.

"Last time we checked, taxes were not optional and the tax bill on his options will be over $10bn in due course anyhow, so the whole thing is a theatrical stunt.

“As he [Mr Musk] said in September, although nobody listened at the time, ‘I will have to sell a lot of stock in Q4’ … so here we are. A stock sale seems imminent/likely."

Mr Campling said the recent poll has been having a “depressing effect” on the share price so “there is probably some sense in getting it done quickly and getting it over with”.

Mr Musk this month engaged in a heated debate with David Beasley, director of the UN's World Food Programme, who challenged billionaires to end world hunger by giving only 0.36 per cent of their wealth in one-time donations. Mr Beasley said in a CNN interview on October 26 that only a small percentage of Mr Musk’s wealth could help solve world hunger.

Mr Musk pledged on Twitter to sell $6bn in Tesla stock and donate it to the WFP if the organisation disclosed more information about how it spends its money.

The California-based electric vehicle maker, which joined the S&P 500 index in December and overtook Toyota to become world's most valuable carmaker last year, reported a 389 per cent jump in its third-quarter net profit to $1.6bn.

The company delivered a record 241,300 vehicles in the third quarter of this year, topping analysts’ expectations of 220,900 vehicles.

The Nasdaq-listed company had received a boost last month after Florida-based car rental company Hertz confirmed that it placed an order of 100,000 vehicles from Tesla.

The news propelled Tesla's market capitalisation to above $1 trillion after its stock surged to a record high of more than $1,000 a share – about 11 years after the company went public.

Updated: November 9th 2021, 3:25 AM
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