If there’s a single piece of news that dominated the headlines on Monday, it was the news surrounding Elon Musk. The eccentric billionaire was at it again over the weekend with his tweeting. This time, Musk had proposed to his Twitter audience whether or not he should sell off some of his personal stake in Tesla (NASDAQ: TSLA). Now it seems he plans to uphold his promise and sell off around $21 billion worth of Tesla stock. Here’s what kicked off this entire situation.
Musk made news over the weekend when he asked whether he owned too much Tesla stock. He subsequently made a poll in which Twitter users could vote “yes” or “no” on the issue. He also promised that, should users vote “yes,” that he would indeed end up selling a large portion of his stake in his own company. Around 58% of the 3.5 million participants voted in favor of the sale, compared to the 42% that didn’t.
The whole topic started after Senator Ron Wyden, a Democrat out of Oregon, proposed taxing billionaires every year for their investments. That would be a dramatic shift in tax policy, as the U.S. previously only taxed investments once they were sold. The idea is that billionaires are supposedly avoiding paying taxes by refusing to sell their investment for as long as possible.
Musk was a vocal critic of the plan, with many other billionaires chiming in as well. Given that Musk’s current equity in Tesla is worth hundreds of billions of dollars, a yearly tax would cost the CEO billions each year. In contrast, if he liquidated his position, that cash would just sit in his bank account, untaxed.
“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 first tweeted back on Saturday. He quickly added that he would “abide by the results, whichever way it goes.”
The eccentric billionaire has had a history of making unusual tweets, many of which have gotten him into a lot of trouble. In the past, he’s been fined – as well as threatened – by the SEC for supposedly using his tweets to manipulate stock prices. Since then, Musk had originally agreed to have a legal tweet review each tweet he made prior to it going public. However, that doesn’t seem to be the case at all anymore.
He’s probably not going to get in trouble this time around, although people are seriously wondering whether he’ll sell over $21 billion worth of Tesla stock, as he promised. Following the news, Tesla’s stock was down 4.8%.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News
