{"id":13110,"date":"2021-11-08T06:30:25","date_gmt":"2021-11-08T11:30:25","guid":{"rendered":"https:\/\/autosector.com\/auto\/?p=13110"},"modified":"2021-11-08T06:30:25","modified_gmt":"2021-11-08T11:30:25","slug":"tesla-tsla-stock-falls-elon-musk-plans-sell-stake","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=13110","title":{"rendered":"Tesla (TSLA) stock falls as Elon Musk plans to sell 10% of his stake"},"content":{"rendered":"

Tesla\u2019s (TSLA) stock is falling by as much as 5% in pre-market trading \u2013 seemingly putting an end to an incredible rally.<\/p>\n

One of the main catalysts appears to be Elon Musk confirming plans to sell 10% of his stake in the company over pressure that the rich don\u2019t pay taxes.<\/p>\n

But is he being genuine?<\/p>\n

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Tesla\u2019s stock has been on an historic run over the last few weeks, adding hundreds of billions in market capitalizing to surpass $1 trillion.<\/p>\n

This weekend, CEO Elon Musk floated an idea that is likely at least partly responsible for putting a stop to the rally.<\/p>\n

He said that he would sell 10% of his stake in Tesla if a Twitter poll would agree, which it unsurprisingly did.<\/p>\n

Over 3.5 million Twitter users voted on the poll and almost 58% of them voted to sell:<\/p>\n

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Musk said that if Twitter votes for it, he will follow through \u2013 meaning he will start selling millions of Tesla stocks.<\/p>\n

Today, Tesla\u2019s stock opened down 5%, which would result in tens of billions in market capitalization going away and roughly the amount of the stake Musk is now apparently planning to sell.<\/p>\n

The CEO framed the idea as a way to pay taxes amid pressure to find ways to tax the super-rich who often live off of loans backed by the rising value of their stock holding in companies.<\/p>\n

However, there are also other reasons why the CEO would want to sell some Tesla stocks right now.<\/p>\n

Electrek<\/em>\u2018s take<\/h2>\n

Normally, I\u2019m quick to defend Musk when he is accused of having ulterior motives, but I think it\u2019s fair this time to dig deeper.<\/p>\n

During this whole conversation about unrealized gains and paying taxes, he never advertised the fact that he has a ton of stock options from his previous CEO grant that are about to expire if he doesn\u2019t exercise them.<\/p>\n

Unlike unrealized gains on stocks you are holding, exercising new stock options is taxable.<\/p>\n

With the massive increase in Tesla\u2019s stock price, some tax experts estimate his tax burden on exercising his stock options at over $10 billion regardless of this new stock sale.<\/p>\n

This means that he was going to have to pay taxes regardless of this Twitter stunt.<\/p>\n

But now, he is making it look like he is willingly making a move that will result in him paying taxes and leaving it \u201cin the hands of the people\u201d with this Twitter poll.<\/p>\n

At the end of the day, he can sell or not sell stocks however he wants, he is within his rights, but it\u2019s a little disingenuous to frame it as he did.<\/p>\n

He found a way to cover his massive tax burden from receiving a ton of new Tesla stocks by making it look like he is setting himself off on purpose to pay more taxes amid social pressure over the super-rich not paying many taxes.<\/p>\n

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