Elon Musk’s Twitter followers ask Tesla billionaire to sell stake with stock in trillion-dollar league
- Some 57.9 per cent of people voted in favour of Musk’s 10 per cent stake sale in his Twitter poll over the weekend
- Stake sale would be worth about US$21 billion based on his last reported holding at current market price
Some 57.9 per cent of votes were in favour of the stake sale, which is worth about US$21 billion at current market price. The poll garnered more than 3.5 million votes.
“I was prepared to accept either outcome,” Musk said, after the voting ended.
The world’s richest person tweeted on Saturday that he would offload the stake if the social media users approved the idea. Musk has previously said he would have to exercise a large number of stock options in the next three months. Selling some of his stock could free up funds to pay for taxes on the options.
Musk held about 170.5 million shares on June 30, and selling 10 per cent of that holding would generate close to US$21 billion based on Friday’s trading, according to Reuters calculations. Tesla closed at US$1,229.09, giving it a market value of US$1.2 trillion.
“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 said on Saturday, adding that he does not take cash salary or bonus “from anywhere”, and only has stock.
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“Whether the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” Senate Finance Committee Chairman Ron Wyden, who floated the tax proposal, said on Saturday. “It’s time for the Billionaires Income Tax.”
Musk has criticised the proposal saying, “eventually, they run out of other people’s money and then they come for you.”
Including stock options, Musk owns a 23 per cent stake in Tesla, the world’s most valuable car company. He also owns other valuable companies including SpaceX. His brother Kimbal Musk on Friday sold 88,500 shares, the latest board member to offload a large number of stocks as Tesla hit the trillion-dollar milestone.
A week ago, Musk said on Twitter that he would sell US$6 billion in Tesla stock and donate it to the United Nations’ World Food Program (WFP), provided the organisation disclosed more information about how it spent its money.
Tesla bull Gary Black, portfolio manager at The Future Fund, said that Musk’s potential stock sale would lead to “1-2 days of modest selling pressure” but said there would be solid institutional demand to snap up the shares at a discount.
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He has an option to buy 22.86 million shares at US$6.24 each, which expires on August 13 next year, according to a Tesla filing. The option exercise could lead to gains of roughly US$28 billion based on Tesla’s Friday closing price.
Musk has said he does not want to borrow against stock to pay taxes because stock value could decline.
The billionaire in September said he was likely to pay taxes of over half the gains he would make from exercising the options. He “relocated” from California to Texas last year, which should lead to a cut to the total tax bill because Texas has no income tax, experts say.
“(It) seems crazy to borrow that much to pay taxes, so I have to assume he’d need to liquidate a substantial amount of the shares bought from the option exercise to pay taxes,” said Bryan Springmeyer, a lawyer at San Francisco-based law firm Springmeyer Law.
Additional reporting by SCMP Reporter
