What Happens If Elon Musk Sells 10% Of His Tesla Stock?

Elon Musk isn’t known for letting opinions stick in his gullet. Instead, he seems to enjoy playing with stock prices and valuations (not to mention cryptocurrencies) like others enjoy peeling the label off a bottle of beer.

For many investors – many of whom were inspired by The Corona Effect (where boredom, disposable income, trading apps and lockdown led to many inexperienced investors getting in on the stock market with a bit more of an appetite for risk than the previous demographic) – Elon’s ability to spike (or tank) a stock or cryptocurrency has proved at best a lucrative enterprise and at worst a fun game.

But there’s a dark side: Musk’s Tweets could lose you a lot of money if you take them as gospel and put all your eggs in one basket (or if a company you have invested in happens to be on the wrong side of one of them). And if the Tesla founder’s comments on Bitcoin earlier this year weren’t warning enough, his latest spate of Tweets illustrates clearer than day why you should always have a diverse portfolio, and never make rash decisions based on groupthink or hype (as this writer learned the hard way).

To his credit, Musk has told people Tesla is overvalued before (though it is possible he is trying to build a reputation for honesty, while also subtly spruiking his company, as he also said he still thought it would be worth more in 5 years, despite being overvalued at the moment he made that comment). His latest Tweet, however, has some Tesla stockholders quaking in their boots.

His Tweet?

“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.”

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?

— Lorde Edge (@elonmusk) November 6, 2021

He then asked followers: “Do you support this?” At the time of writing, 57.9% of respondants (out of 3,519,252 votes) had answered: “Yes.” 42.1% had answered: “No.”

In another Tweet, Musk added: “I will abide by the results of this poll, whichever way it goes.”

I will abide by the results of this poll, whichever way it goes— Lorde Edge (@elonmusk) November 6, 2021

“Note, I do not take a cash salary or bonus from anywhere. I only have stock, thus the only way for me to pay taxes personally is to sell stock.”

more like a guilt-free way to sell at the top of the bubble before the correction. so no one can attack him lol— Trenton (@Trenton_94) November 7, 2021

Jordon Hodges – an American actor, screenwriter and producer known for his role as Noah Daly in the 2014 drama film Sand Castles – commented on Musk’s Tweet, writing: “He has something else planned here. Might take us a minute to see it. Elon is a ninja. He’s never 2D.”

He has something else planned here. Might take us a minute to see it. Elon is a ninja. He’s never 2D.— Jordon Hodges (@jordon_hodges) November 6, 2021

Tesla investor and host of YouTube channel Dave Lee on Investing, Dave Lee, commented: “Hey Elon, lots of sites out there that offer paid twitter poll votes for cheap (just google ‘buy twitter poll votes’). This poll can be easily manipulated by those with strong financial incentives.”

Another Twitter user accused Musk of being a coward: “It’s cowardly to deflect this decision to your followers. Take some responsibility for yourself. You have the ability to help so many people by paying your fair share of taxes, no debate is needed and certainly no polls. Just be a responsible citizen and pay your taxes.”

It’s cowardly to deflect this decision to your followers. Take some responsibility for yourself. You have the ability to help so many people by paying your fair share of taxes, no debate is needed and certainly no polls. Just be a responsible citizen and pay your taxes.— Snapps I support our NHS (@snapps1001) November 7, 2021

“This Twitter Poll decides the fate of $20,000,000,000+ of Tesla stock lol,” verified Twitter user Mr Beast wrote.

This Twitter Poll decides the fate of $20,000,000,000+ of Tesla stock lol— MrBeast (@MrBeast) November 6, 2021

Musk’s Tweet also highlighted the distrust many wealthy (and, for that matter, poor) Americans have of how the government spends public money, with various Twitter users (including wealthy capitalist Peter Schiff) suggesting Musk would be better off helping the world privately.

Schiff wrote: “From a diversification and valuation perspective the sale makes a lot of sense. The fact that you’ll have to pay taxes on the proceeds however is not a net benefit to society. The public would be better served by you wisely investing that money rather than government wasting it.”

How do you suggest we pay for things like defense, veterans, roads, bridges, schools, education, hospitals, parks, airports, social security, agriculture, etc… if people don’t pay their fair share of taxes. You don’t think we should have any of this in America?— KHOPE99 (@khope99) November 7, 2021

Many other Twitter users bemoaned the Tweet, fearing a stock price crash on Monday. Twitter user Cory Wijnhamer wrote: “You do realize that Tesla stock will now tank on Monday because of this, thus ending the awesome run the stock has made the last month. Posts like this is taking money out of the pockets of the people who have believed in you and your company the most.”

Other users said that they thought Musk had no choice but to sell. One wrote: “If you did your research. He has to sell his stocks in order to pay taxes on his stock options that expiring in the money. His tax bill is going to be massive and needs to do this by the end of December. He literally has no choice.”

If you did your research. He has to sell his stocks in order to pay taxes on his stock options that expiring in the money. His tax bill is going to be massive and needs to do this by the end of December. He literally has no choice— Justin Miller (@lucky11ent) November 7, 2021

Oh man.. TSLA is 1% of my portfolio. Good luck. You do realize that there is a BUNCH of successful companies that you can split your money into and grow, right? I would never put all my money in one stock, ever. pic.twitter.com/UtVuIXwwB1— RustyTrades (@RustAnon) November 7, 2021

At the time of writing, Tesla stock price is down 7.82% today but is still up compared to five days ago.

Many are currently waiting anxiously to see what becomes of Tesla’s share price in the coming days. What will happen if Musk sells 10% of his Tesla stock remains unknown, but many fear it could sink the stock price (for how long or by how much, exactly, remains unclear).

Not everyone believes Musk selling his stock will be catastrophic. According to Reuters, “Tesla bull Gary Black, portfolio manager at The Future Fund, said that Musk’s potential stock sale would lead to ‘1-2 days of modest selling pressure,’ but said there would be solid institutional demand to snap up the shares at a discount.”

He is a Tesla bull though, so he would say that.

Reuters also reported: “As of June 30, Musk’s shareholding in Tesla came to about 170.5 million shares and selling 10% would amount to close to $21 billion based on Friday’s closing, according to Reuters calculations.”

This isn’t the first time lately Musk has floated the idea of shedding dollars. Last week he tweeted that he would sell $US6 billion (AU $8 billion) in Tesla stock and donate it to the United Nations’ World Food Program if the organisation was more transparent about how it spent its money.

Read Next

• Tesla’s Big Money Problem Is Killing The Planet
• Elon Musk Claims Dogecoin Could Drag Crypto Out Of The Dark Ages

The post What Happens If Elon Musk Sells 10% Of His Tesla Stock? appeared first on DMARGE.

from DMARGE https://ift.tt/3mVvFEF