Suggestion From Twitter User, Elon Musk Should Sell 10 Percent Shares In Tesla

Tesla Inc. is one of the most valuable car manufacturers in the world. (photo: tesla)

JAKARTA - Tesla Inc CEO Elon Musk must sell around 10% of his stake in Tesla. This suggestion came from 57.9% of people who voted in a poll on Twitter conducted by the world's richest person. Musk in a poll asked users of the social media network if he should sell his stake in Tesla.

"I'm ready to accept any outcome," Musk said, after the vote ended. The poll collected more than 3.5 million votes.

The world's richest man tweeted on Saturday 6 November that he would sell 10% of his shares if users agreed to the proposal. Musk previously said he would have to exercise a large number of stock options in the next three months, which would create a huge tax bill. Selling some of its shares can free up funds to pay taxes.

As of June 30, Musk's stake in Tesla stood at about 170.5 million shares and sales of 10% would amount to close to $21 billion by Friday's close, according to Reuters calculations.

"A lot is made these days of unrealized profits as a means of tax evasion, so I'm proposing to sell 10% of my Tesla shares," Musk said on Saturday, November 6, adding that he doesn't take cash paychecks or bonuses "from anywhere", and only has supplies.

US Senate Democrats have unveiled a proposal to tax billionaire shares and other tradable assets to help finance President Joe Biden's social spending agenda and fill a loophole that would allow them to defer capital gains taxes indefinitely.

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 Musk (@elonmusk) November 6, 2021

Musk has criticized the proposal saying, "Eventually, they run out of other people's money and then they come for you."

Senate Finance Committee Chair Ron Wyden, who floated the tax proposal, said Saturday: "Whether the richest person in the world pays taxes should in no way depend on the results of a Twitter poll."

"It's time for the Billionaire Income Tax," Wyden said.

Including stock options, Musk owns a 23% stake in Tesla, the world's most valuable car company whose market value recently exceeded $1 trillion. He also owns other valuable companies including SpaceX.

His brother Kimbal Musk, on Friday, November 5 sold 88,500 Tesla shares, and became the latest board member to sell a large number of Tesla shares to a record high.

A week ago, Musk said on Twitter that he would sell $6 billion of Tesla stock and donate it to the United Nations World Food Program (WFP), provided the organization discloses more information about how he spends the money.

Tesla bullfighter Gary Black, portfolio manager at The Future Fund, said a potential sale of Musk's shares would cause "1-2 days of modest selling pressure," but said there would be strong institutional demand to pick up the stock at a discount.

Musk himself has said that he doesn't want to borrow the stock to pay taxes because the value of the stock could fall.

Musk instead has the option to buy 22.86 million shares at $6.24 per share, which expires on August 13 next year, according to a Tesla report. If this option is exercised, it could generate a profit of around $28 billion based on Tesla's closing price on Friday of $1,222.09.

In September, Musk said he would likely pay taxes on more than half of the profits he would have made while exercising the option. Last year, Musk said he had moved from California to Texas, which should have led to a total cut in the tax bill because Texas has no income taxes, experts say.

"(It seems) crazy to borrow that much to pay taxes, so I have to assume he needs to liquidate a large number of shares purchased from exercising options to pay taxes," said Bryan Springmeyer, a San Francisco attorney with law firm Springmeyer Law.