Immediately following a poll on Twitter in which he asked if he should sell 10% of his Tesla stock, CEO Elon Musk sold $5 billion (R75 billion) worth of Tesla stock.
According to Wednesday’s official filings, the richest individual in the world has sold more than 4.5 million shares this week. His first sales in more than five years were made with these purchases.
Tesla CEO Elon Musk’s recent survey on whether he should sell some of his ownership in the company, which was linked to the discussion about whether wealthy people are paying their fair share of taxes, has caused quite a stir on social media. Shares of the carmaker plunged 16 percent in two days after an overwhelming vote in favor of his selling prompted investors to fear the ramifications of such a large stock sale.
After exercising his stock options Monday, Tesla CEO Elon Musk paid approximately $1.1 billion in income taxes, according to two filings. That trading plan was put in place in mid-September, and those trades were carried out in accordance with it.
That Tuesday and Wednesday, he went out and sold what was left. Those disposals were not pre-planned, according to the documents.
Only time will tell if Musk’s weekend survey on Twitter had any impact on his decision to carry out some or all of the transactions—or whether he’ll keep selling until he’s hit 10%. Assuming he included the value of his options in his overall holdings, he’d have to let rid of about 17 million shares to get there.
Musk was able to exercise his options as a result of a significant prize he earned in 2012. They would have expired if he hadn’t used them by the end of August. A common way to pay taxes on these transactions is to sell a portion of your freshly purchased stock. This year, Musk openly stated that he expected to use the options he received from the 2012 award within the near future.
Even if a Twitter poll had predicted a different outcome, the option exercises and corresponding sales may have been carried out regardless of the outcome. So long as CEOs don’t reveal the specifics of their plans, they can cancel or change them at any time.
Tesla’s stock price fell by $50 billion on Monday and Tuesday as a result of the attention-grabbing Twitter poll. By the end of the day, Tesla’s losses this week had been reduced to less than 13 percent.
The stock gained 2.7 percent in post-market trading following the disclosure of the first few trades. It was after that that the filings started to come in, but as of 2:06 p.m. in Hong Kong on Thursday, Tesla tokens were trading at $1,049.
As recently as 2016, the tycoon sold part of the stock he had just purchased to pay around $590 million in income taxes.
“Much has been said recently about unrealized gains being a technique of tax avoidance,” Musk wrote in his poll announcement on Nov. 6, “therefore I suggest selling 10% of my Tesla stock.” Over 3.5 million people cast their ballots, and over 58% voted in favor of a sale.