Elon Musk Sells $5bn Of Tesla Stock After Twitter Poll

Tesla and SpaceX chief executive Elon Musk. Image credit: SpaceX

One of the world’s richest men, Elon Musk, has sold 3 percent of his stake in Tesla, just days after holding a Twitter poll

Elon Musk has offloaded 3 percent of his shareholding in the world’s most valuable car maker, Tesla.

The 3 percent share sell off has provided Musk with approximately $5 billion, and it comes just days after the billionaire had asked Twitter whether he should sell 10 percent of his shareholding.

The result was 57.9 percent voting yes he should sell the 10 percent stake, with 42.1 percent of voters voting no.

Share sale

The Guardian newspaper confirmed (citing regulatory filings) on Thursday that Musk has sold about $5bn in shares amounting to roughly 3 percent of his Tesla holdings

It sees that $4bn worth of the sale, or 3.6 million shares, could be considered as counting towards his 10 percent pledge on Twitter.

Another $1.1bn worth, amounting to 934,000 shares, was sold under an options arrangement to acquire nearly 2.2 million shares that was already in train before the poll.

After Musk had asked Twitter whether he should sell 10 percent of his shares, the stock of Tesla sank 12 percent on Tuesday in a multi-day selloff that endangered the company’s position in the $1 trillion club.

That said, Tesla’s share price recovered 4.3 percent on Wednesday.

Musk reportedly has more than 20 million further stock options that are due to expire in August 2022.

Musk has tweeted previously that he takes no salaries or bonuses from his companies. However he has sold shares before.

Billionaires tax

Musk is the one of the richest man in the world thanks to his shareholdings, and the share sale will help him pay the potential ‘billionaires tax’, as proposed by US Democrats.

US Democrats have proposed tackling the gap between the wealthiest Americans and everyone else by introducing a tax that the 700 billionaires in the US would pay on the annual increase in the value of stocks and shares they own.

Currently, tax is only due when gains are “realised”, which means the holder only pays when they sell the stock and book the profit.

Now that Musk has ‘realised’ some shares, it will result in him having to make a tax payment.

It is estimated that thanks to his shareholdings in both Tesla and SpaceX, Elon Musk has a paper fortune of approximately $330bn.

Regulatory trouble?

But Musk could, once again, find himself in hot water with the US financial regulator, the US Securities and Exchange Commission (SEC).

In June it emerged that the SEC had notified Tesla that two of Musk’s tweets from 2019 and 2020 – one about Tesla’s solar roof production volumes and one about the company’s stock price – hadn’t received the required pre-approval.

And now Musk could find himself in trouble once again, because announcing his intention to sell has affected the share price of Tesla.

It should be remembered that for a number of years now, Elon Musk has been treading a very fine line with the SEC.

The US financial regulator has previously sought to remove him as CEO and any executive position within Tesla.

SEC clash

The issue with the SEC began in August 2018, when out of the blue, Musk tweeted that he was considering taking Tesla private and that he had secured funding to do so.

Musk was almost immediately hit with two lawsuits which alleged that Musk’s Tweets were fraudulent effort to attack short sellers.

These tweets brought Musk to the attention of the SEC, which accused Musk of securities fraud, and alleged he made a series of “false and misleading” tweets about potentially taking Tesla private.

Indeed, the SEC sued Tesla and sought to ban Elon Musk from acting as an officer or director of a publicly traded company.

In the end, the US financial regulator forced Musk to step down as chairman of Tesla and pay $20m in penalties.

Musk however was allowed to retain the CEO role.

Musk also had to submit any public statements (including tweets) about the company’s finances to vetting by its legal counsel before publishing them.

And it should be remembered that Musk did not exactly endear himself to the SEC after he publicly attacked the watchdog – on two occasions. In December 2018 for example, Musk publicly admitted that he had “no respect” for the SEC.

And senior SEC officials were also not happy at Musk, feeling he got away lightly in the SEC agreement.

In May 2019 SEC commissioner Robert Jackson made clear he did not support the agreement reached between Musk and the SEC.