Tesla Inc CEO Elon Musk is now compelled to sell 10% of his holdings after 57.9% of Twitter users voted in favor of it, which has already had a negative impact on Frankfurt's trading table.
“I was prepared to accept either outcome,” Musk admitted, after asking followers on that social media for their approval. He got over 3.5 million replies.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10 per cent of my Tesla stock,” Musk had said Saturday.
US Democrat Senators have announced plans to tax billionaires’ stocks to fund President Joseph Biden’s social spending as well as fill a loophole that has made it possible to defer capital gains taxes endlessly.
Musk has criticized the proposal saying: “Eventually, they run out of other people’s money and then they come for you.”
As of June 30, Musk’s shareholding in Tesla came to about 170.5 million shares and selling 10 per cent would amount to close to $21 billion based on Friday’s closing, according to Reuters calculations.
Including stock options, Musk owns a 23 per cent stake in Tesla, the world’s most valuable car company whose market value recently exceeded $1 trillion. He also owns other valuable companies including Space X.
His brother Kimbal Musk sold 88,500 Tesla shares Friday, becoming the latest board member to offload a large number of Tesla stocks which hit record highs.
A week ago, Musk said on Twitter that he would sell $6 billion in Tesla stock and donate it to the United Nations’ World Food Program (WFP), on the condition that the organization disclosed how it spent its money.
Musk has previously said he did not want to borrow against stock to pay taxes because stock value could go down. If he sold some of the stocks, that could free up funds for the tax bill.
In this scenario Tesla's Frankfurt-listed shares have fallen by around 9 per cent in early trading Monday. While Tesla's shares are mainly traded on the US Nasdaq index, the company has a dual listing with a presence on the German stock market too. Its US-listed shares are up 73.2 per cent so far this year, compared with a 23.9 per cent increase in the Nasdaq Composite index.