Tesla shares fall after Twitter users voted Elon Musk to sell shares

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Tesla shares fell 7.5 percent in pre-market trading on Monday as investors prepared for the proposed sale of about a tenth of its stake in boss Elon Musk’s electric car maker, according to his Twitter poll.

Musk, Tesla CEO and richest person in the world, tweeted on Saturday that he would sell 10 percent of his shares if the users of the social media network approve the proposal.

The electric vehicle maker’s shares fell 6.2 percent to $ 1,146.43 (about Rs 84,900). The shares listed in Frankfurt lost around 7 percent to 989.10 euros (around 84,700 rupees).

The Twitter poll, which asked Musk’s followers whether to sell shares, received more than 3.5 million votes, and 57.9 percent of people voted “yes”.

Musk had previously announced that it would have to exercise a large number of stock options over the next three months, which would result in a heavy tax burden. Selling some of its shares could free up funds to pay taxes.

“I was ready to accept both results,” said Musk after the vote ended. Market participants expected speculators to try to drive its sales.

As of June 30, Musk’s stake in Tesla was approximately 170.5 million shares and the 10 percent sale would be nearly $ 21 billion based on Reuters calculations the close of trading on Friday.

Including stock options, Musk owns 23 percent of the shares in Tesla, the world’s most valuable auto company.

In the three months ended November 4, Tesla corporate insiders sold Rs 259.62 million (approximately Rs.1922 billion) of shares, excluding sales of indirectly held stocks, according to data from Refinitiv Eikon.

Musk’s straw poll follows a proposal by U.S. Senate Democrats to tax billionaires’ stocks and other tradable assets to fund President Joe Biden’s welfare expenses and fill a void that has allowed them to defer capital gains taxes indefinitely.

“The last thing you do when you offload a massive commitment is show your hand,” said Chris Weston, chief research officer at broker Pepperstone in Melbourne.

“Buyers tend to back off when you have an overhang like this, but this is no ordinary story and is Musk’s way of returning to the suggestion of taxing the elite with profits made from unrealized gains.”

Tesla broke a $ 1 trillion market cap last month, making it the fifth U.S. company to join a club that includes Apple, Microsoft, Amazon, and Alphabet.

“The slump won’t last very long because Tesla has such a phenomenal track record of recovering from such sell-offs,” said David Madden, a market analyst at Equiti Capital in London.

Investors will also be watching for regulatory responses to Musk’s Twitter poll. The US Securities and Exchange Commission had ordered Tesla to review all material public notices Musk made about the electric vehicle maker after he tweeted in 2018 that he had “secured the funding” to potentially raise Tesla with $ 72 billion 33,145 billion rupees) to take privately) transaction.

© Thomson Reuters 2021

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