Elon Musk Stock Sale: Tax Bill & Twitter Poll Explained

Tesla Stock Response to Elon Musk's Poll

On Monday morning, Tesla shares experienced a decline of 4.5% following a query posed by CEO Elon Musk to his substantial social media following. He asked his 62.8 million followers for their opinion on whether he should sell 10% of his Tesla stock.

The poll garnered approximately 3.5 million votes, with around 58% of respondents indicating their support for the proposed sale. Musk subsequently stated he would honor the outcome of the poll, regardless of the result.

Pre-Existing Plans for Stock Sales

The tweet appears to be a calculated move, given that Musk had previously indicated an intention to sell a significant portion of his Tesla shares. He had discussed this possibility in public forums prior to the poll.

During a September discussion with tech journalist Kara Swisher, Musk revealed that a considerable number of his Tesla stock options were set to expire in August of the following year. He stated that a substantial block of these options would be sold in the fourth quarter.

Tax Implications and Executive Compensation

A significant tax liability related to stock options granted in 2012 also contributes to the need for sales. Musk has consistently stated he forgoes a traditional salary from Tesla.

The income tax due on the gains from these stock options, originally awarded at $6.24 per share, could exceed $15 billion, considering Tesla’s current trading price of over $1,200.

Past Controversies and Shareholder Concerns

While the immediate impact of the poll may be limited to a temporary dip in share price, Musk’s social media activity has previously drawn criticism from shareholders.

Earlier this year, Musk faced legal action from a Tesla investor who alleged that his “erratic tweets” breached a settlement agreement with the U.S. Securities and Exchange Commission. This agreement mandates oversight of his social media communications.

The lawsuit referenced a tweet from May, where Musk expressed the opinion that “Tesla stock price is too high imo.”

Key Takeaways

• Tesla shares fell 4.5% after Elon Musk’s poll.
• Approximately 58% of voters supported the stock sale.
• Musk had previously signaled plans to sell shares due to expiring options and tax obligations.
• His tweets have previously led to legal challenges from investors.