Written by Brenda Nakalema

Elon Musk sells Tesla shares as promised following Twitter poll results

Elon Musk displayed his flair for drama once again when he asked his fans on Twitter whether he should sell …

Elon Musk displayed his flair for drama once again when he asked his fans on Twitter whether he should sell 10% of his stake in the electric car maker. Like most of his other controversial statements made over Twitter, Elon caused a stir when he told his followers that they would decide the future of his Tesla holdings. His tweet raised eyebrows not only because of the sale but also because of the reason given behind the sale. In the Tweet, Elon said, “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?” Over 3million people voted, with 57.9% voting “yes” for the sale and 42.1% voting “no”.

Nearly $5 billion in Tesla stock was sold according to financial filings released on Wednesday evening. Musk still owns more than 166 million shares. Despite the fact that his trust sold more than 3.5 million shares worth over $3.88 billion, they were not marked as 10b5, meaning they were not scheduled sales.

According to certain documents, the sale of about a fifth of shares was made based on a pre-arranged trading plan that had been set up in September, proving that Musk’s tweet was more fanfare than fact.

One of the reasons ostensibly given to justify this drastic move was Musk’s need to satisfy tax obligations related to an exercise of stock options. Almost immediately after the Twitter poll, Tesla shares slumped 15% over Monday and Tuesday but managed a recovery of 4% on Wednesday.

AJ Bell analyst Danni Hewson was quoted saying, “The reason that we’re seeing stock rebound is because there does seem to be a method to his madness. It’s about making sure that the market understands this isn’t something done on a whim or because his Twitter followers told him he should. He’s had his decision already made, rubber stumped.”

Musk’s move comes on the heels of a proposed “Billionaires tax”, which could have the wealthiest individuals taxed on “unrealized gains” even if they do not sell any of their stock. “Elon Musk doesn’t take a salary; he’s paid in big chunks of stock. At some point in time, you have to take some of that concentration down,” said Art Hogan, Chief market strategist at National Securities in New York.

While speaking at the DealBook Online Summit on Wednesday, Citadel CEO Ken Griffin was quoted saying that he did not support Elon Musk’s decision to sell his shares. “Individuals like Elon Musk, like Jeff Bezos, have transformed life, and we want to keep them in control of their companies, as long as they’ve got the energy and the ambition to keep moving the business forward.”

Previously, at an appearance at the Code Conference in September, Musk said when his options expire at Tesla, his marginal tax rate would be over 50%. A string of sales also accompanied the sale of his shares concluded by other holders of Tesla stock such as board chairwoman Robyn Denholm, Kimbal Musk, Ira Ehrenpreis and Antonio Gracias, all of whom offloaded hundreds of millions of dollars worth Telsa shares since October 28, after Tesla’s market cap passed the 1 trillion mark.