Days after a Twitter poll asking if he should sell 10% of his Tesla stock, Musk seems to have abided by the results.
The billionaire entrepreneur has reportedly sold about (£3.7 billion) $5 billion in Tesla shares on Wednesday. This amounts to roughly 3% of his Tesla holdings.
The sale comes four days after 57.9% of respondents on Twitter voted ‘Yes’ to him selling 10% of his stake in the electric carmaker.
About 3.6 million shares sold on Wednesday, worth $4 billion, could count towards the 10% he’d promised on Twitter.
Under an arrangement that was already in progress, to acquire nearly 2.2 million shares, an additional $1.1 billion worth of shares were also sold according to filings with the US stock market regulator.
While the additional sale had been scheduled in September, the filings showed that the sale of the remainder 10% of shares had not been scheduled.
The additional share sales are separate and would provide Musk with sizeable reserves of cash, given that he is not paid a salary.
‘I only have stock, thus the only way for me to pay taxes personally is to sell stock,’ he said on his original Twitter thread. Musk’s $281.6 billion fortune is largely tied to stakes in his companies Tesla and SpaceX.
In the two days after Saturday’s poll came out in favour of him selling Tesla shares, the company’s shares tanked 12%. After a multi-day selloff that endangered the company’s $1 trillion status, it recovered 4.3% on Wednesday.
Musk’s Twitter poll where the majority said they agreed with him selling his stock, seems to have helped bring down Tesla’s share price before he sold them.
The sales of the option-related shares would have paid for associated taxes but it’s unclear whether it was related to Musk’s Twitter poll.
Musk has more than 20 million further stock options that are due to expire in August 2022.
Exercising stock options trigger income taxes, which are usually settled using money raised from immediately selling some of the newly acquired shares.
The last time the tech mogul sold shares was in 2016 when he last exercised stock options. At the time, shares were also sold to cover an income tax bill close to $600 million.
The 10% stock sale plan would have a slightly negative near term impact according to Mark Arnold, chief investment officer at Hyperion Asset Management in Brisbane where Tesla is the top holding in its global fund.
While Tesla has lost close to $150 billion in market value this week, investors are still buying into it. Roughly 58% of Tesla trade orders on Fidelity’s brokerage website on Wednesday were for purchases, rather than sales.
Tesla’s deal with car rental company Hertz in October sent its value up by more than 51%.
In June, investigative site ProPublica reported that Musk and other moguls, by structuring their pay, built their wealth into the billions while paying almost nothing in federal taxes.
While it’s not illegal, it is how the uber-wealthy get richer and pay minimal taxes, sometimes by taking out loans using their stock holdings as collateral.
Salaried workers in comparison live primarily off their paychecks, which is subject to income tax.