By
Bena Ilyas
April 23rd, 2024
Elon Musk offloaded a substantial amount of Tesla stock to meet tax obligations, driving TSLA price down more than 10%.
Elon Musk sold $5 billion worth of Tesla Inc (NASDAQ: TSLA) stock shortly after conducting a Twitter poll on whether or not he should do so. The CEO of the electric car maker and the current richest person in the world has offloaded over 4.5 million shares this week. Furthermore, the latest sale, representing roughly 1% of Musk’s substantial stake in Tesla, is the first in more than five years.
According to a regulatory filing, Musk already had the stock sale planned before polling his Twitter followers. This was due to tax obligations dating back to September. Regardless, the majority of 3.5 million respondents still voted decisively in favor of the Tesla CEO selling his shares – 58% to be exact. The exact Twitter poll read:
“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?”
This consequently drove down the share price of the electric vehicle car company by 16% within two days. Tesla stock (TSLA) was below $1,000 temporarily on November 10th after hitting an all-time high of $1,230 six days earlier. However, this substantial drawdown did not come as a surprise to many investors who had worried about the impact of such a huge sale. As of press time, Tesla stock is down 13% over the last five days.
Elon Musk Still Commands a Hefty Volume of Tesla Stock
Musk made the sale at the beginning of the week on Monday. Plus, according to a filing submitted to the securities and exchange commission (SEC) on Thursday, November 11th, Musk sold over 934,000 Tesla shares. This amounted to approximately $1.1 billion, used to pay income taxes on equity options also exercised on the same day.
Filings showed that subsequent stock sales after this, on Tuesday and Wednesday, did not suggest that they were pre-planned. It is still unclear whether Musk’s Twitter poll influenced his decision to execute the latter sales transactions. Furthermore, no one knows whether the Tesla CEO will keep offloading more stocks until he meets the 10% threshold. However, at the time of writing, Musk still has more than 170 million shares. To meet the 10% sale quota, he would need to shed approximately 17 million more shares. However, this number could rise if Musk chose to incorporate exercisable options in his total holdings.
Amid this development, there is the speculation that Musk may pump some of the stock sale proceeds into crypto. In fact, Michael Saylor, CEO at MicroStrategy, earlier suggested that the Tesla CEO invest in BTC. Saylor’s suggestion, which came about shortly after Musk’s Twitter poll, but preceded the actual sale announcement, read:
“If the goal is diversification, an alternate strategy to consider is converting the $TSLA balance sheet to a Bitcoin Standard and purchasing $25 billion in $BTC. That would deliver diversification, inflation protection & more upside for all investors in a tax efficient manner.”
Tesla currently holds 43,200 BTC at a valuation of $2.79 billion – going by current price rates.