Tesla CEO Elon Musk said he would sell 10% of his holdings — worth about $20 billion — in the electric car maker based on the results of a poll he conducted on Twitter over the weekend. Tesla shares slumped about 5% in premarket trading on Monday.
Musk said he would abide by the results of the poll, which ended with 58% of more than 3.5 million votes calling for him to sell the stock. Musk owns about 17% of the 1 billion outstanding Tesla shares. If he sold 10% of his holdings at their current price of around $1,170 per share, it would net him around $20 billion.
But Musk’s motivation for selling the stake could be deeper than a push from a Twitter poll, according to the New York Times’ DealBook. Musk holds about 23 million stock options, awarded in 2012, that will expire in August. But the grant — valued at about $30 billion — is structured in such a way that he would likely have to pay income taxes when he exercises the options, the report noted. The tax bill could exceed $10 billion.
Musk’s poll received pushback from at least one Democratic lawmaker who has been advocating for aon the likes of the Tesla CEO, Amazon.com founder Jeff Bezos and others.
“Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” Senator Ron Wyden, a Democrat from Oregon, wrote in response to Musk’s tweet. “It’s time for the Billionaires Income Tax.”
Last week, Tesla shares hit an all-time intraday high of $1,243.49 per share. It’s the most valuable car maker in the world with a market capitalization of more than $1 trillion.
Under the proposed billionaires tax, the nation’s wealthiest citizens would have to pay taxes when the price of the stocks they hold goes up, even if they don’t sell any shares. It’s a concept called “unrealized gains,” and Musk is sitting on a lot of them with a net worth of roughly $300 billion.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” he tweeted Saturday afternoon. “Do you support this?”
Much of Musk’s wealth is held in shares of Tesla, which does not pay him a cash salary. “I only have stock, thus the only way for me to pay taxes personally is to sell stock,” he tweeted.
Musk, who is known for his sometimes flippant tweets, said he would “abide by the results of this poll.”
The prospect of him selling billions worth of Tesla stock inthe coming months depressed Tesla’s stock price before markets opened Monday.