Tesla shares fall after Twitter users voted for Musk to sell shares

The logo of the car manufacturer Tesla can be seen at a dealer in London, UK, 14 May 2021. REUTERS / Matthew Childs

November 8 (Reuters) – Tesla Inc shares fell 7.5% in pre-market trading on Monday as investors prepared for CEO Elon Musk’s proposed sale of about a tenth of his shares in the electric car maker following his Twitter survey.

Musk, Tesla’s CEO and the world’s richest man, tweeted on Saturday that he would take off 10% of his shares if users of the social media network approved the proposal.

The electric car manufacturer’s shares (TSLA.O) fell 6.2% to $ 1,146.43. Shares listed in Frankfurt fell around 7% to 989.10 euros.

The Twitter poll, which asked Musk’s followers whether he would sell shares, received more than 3.5 million votes, and 57.9% of the people voted “Yes”. read more

Musk had previously said he would have to exercise a large number of stock options over the next three months, which would create a large tax bill. Selling some of his shares could free up funds to pay the tax.

“I was prepared to accept both outcomes,” Musk said after the vote. Market participants expected that speculators would try to front his sales.

As of June 30, Musk’s shareholding in Tesla reached around 170.5 million shares, and selling 10% will amount to almost 21 billion dollars based on Friday’s closure, according to Reuters calculations.

Including stock options, Musk owns a 23% stake in Tesla, the world’s most valuable car company.

During the three months to November 4, the company’s insiders in Tesla sold shares worth $ 259.62 million, excluding dispositions of indirect shares, according to Refinitiv Eikon data.

Musk’s straw poll follows a U.S. Senate Democrat proposal to tax billionaires’ shares and other tradable assets to help fund President Joe Biden’s social spending agenda and fill a loophole that has allowed them to defer capital gains tax indefinitely.

“The last thing you do when you relieve a massive exposure is expose your hand,” said Chris Weston, head of research at broker Pepperstone in Melbourne.

“Buyers tend to walk away when you have an overhang like this, but this is no ordinary story and is Musk’s way of getting back to the proposal to tax the elite with gains on unrealized profits.”

Tesla broke a trillion dollars in market value last month, becoming the fifth US company to join a club that includes Apple (AAPL.O), Microsoft (MSFT.O), Amazon (AMZN.O) and Alphabet (GOOGL.O ).

“The dip is not going to last too long, because Tesla has had such a phenomenal record in recovering from this type of sale,” said David Madden, a market analyst at Equiti Capital in London.

Investors will also look for any response from regulators on Musk’s Twitter survey. The US Securities and Exchange Commission had ordered Tesla to investigate all significant public communications Musk made regarding the electric car maker, following his 2018 tweet that he had “secured financing” to possibly take Tesla privately in a $ 72 billion transaction.

Reporting by Sruthi Shankar, Tanvi Mehta and Anisha Sircar in Bengaluru and Vidya Ranganathan in Singapore; Editing Shounak Dasgupta

Our standards: Thomson Reuters Trust Principles.

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