Tesla eases after Twitter poll backs Elon Musk’s share sale

Tesla investors braced Monday as they waited for the next move from owner Elon Musk after the billionaire suggested that he could be selling 10% of his Tesla shares.

In a Twitter poll conducted over the weekend, Musk asked his 62 million followers on the social media site whether they were in favor of him selling 10% of his Tesla stocks. Nearly 58% of the 3.5 million users who participated in the survey voted in favor. Tesla shares fell on Monday following the news.

Musk owns about 20% of all Tesla shares, equivalent to roughly $200 billion (€173 billion). His personal fortune is currently about $338 billion, according to the Bloomberg Billionaire Index.

The survey followed a back-and-forth last week between the Tesla founder and the chief of the United Nations World Food Programme (WFP), David Beasley. In an exchange on Twitter, Musk had said he would sell Tesla shares to gain cash to help fight world hunger as long as Beasley could prove where the money was going.

Billionaires to the rescue?

Additional funds of just under $7 billion could save 42 million people currently facing the prospect of starvation, Beardsley wrote on Twitter last week. He called on the world’s billionaires for a “one-time” cash favor in order to save lives.

“If we don’t act, this is what will happen: people WILL die of hunger; there will be destabilization of nations & mass migration, which will cost 100X more than the $6B+ we need,” Beasley wrote on Twitter. “Which do you think is a better investment?!”

The dialogue took place as lawmakers in the US continued discussing introducing a so-called billionaire income tax to help pay for a sweeping domestic policy package pushed by President Joe Biden. The plan would have 700 billionaires, including Musk, pay taxes on unrealized gains on assets such as stocks.

Unrealized gains occur when the price of an asset rises above the holder’s original purchase price, but the investor has yet to sell it. The unrealized gain is the increase in value of the stock before it has been sold for cash.

New tax regime in discussion

In an analysis of the proposed tax, Bloomberg named Musk as someone who would be particularly affected. Roughly two-thirds of the CEO’s net worth comes from Tesla shares and options. Musk criticized the proposal on Twitter.

“At some point, they run out of other people’s money. And then they come after you,” he wrote in late October.

Musk isn’t the only billionaire whose wealth is at risk of taxation. Unlike your average worker in the United States, the wealth of the superrich tends to be tied to assets like stocks more than it is to income. Wealth held in stocks is not taxed directly, however. It is taxed only when stocks are sold.

According to research from the investigative platform ProPublica published earlier this year, Musk paid no state income taxes in 2018, and Amazon CEO Jeff Bezos paid no US income taxes at all from 2007 to 2011.

Musk’s motives unclear

Musk’s recent Twitter debacles highlight the growing public debate about wealth inequality.

He has said he is prepared to accept the result of the Twitter poll. Selling 10% of his Tesla shares would raise over $20 billion at the current share price. A hefty tax payment on top is also likely.

Musk did not say when he plans to carry out the sale. US Senator Ron Wyden, considered the mastermind behind the billionaire tax, wrote on Twitter that Musk’s poll was an inappropriate way to respond to the issue at hand.

Such a move is “Musk’s way of getting back at the proposal to tax the elite with gains on unrealized profits,” Chris Weston, head of research at broker Pepperstone in Melbourne, told Reuters.

“With his posturing on Twitter, Elon Musk is marketing Tesla at the highest level,” Frank Schwope, auto industry analyst at Germany’s Nord LB bank, wrote in a note on Monday. Referring to the Tesla leader’s past social media antics, Schwope said, “the master of the one-man show has struck again.”

Feeding 42 million

Now that Musk is presumably planning to liquidate a share of his holdings, though he is not legally bound to, the question remains whether he will put the funds toward fighting starvation, and, if so, how?

Musk had asked the UN’s Beasley to explain on Twitter exactly how the money would solve world hunger.

In response, Beasley stressed that the funds would not end all world hunger, but that they could save millions of people currently on the brink of starvation. That amount of money would cover the cost of food to feed 42 million people every day for a year using the World Food Programme’s current systems, Beasley wrote on Twitter.

Critics of such charity initiatives argue that much of the donated funds get eaten up by overhead costs or corrupt players, with little reaching the intended recipient of the aid. Others say it creates a cycle of aid dependency and is not a long term solution.

But Beasley said the “perfect storm” of conflict, climate change and COVID-19 has created unprecedented numbers of hungry people. If the world’s top 400 billionaires contributed 0.36% of their total net worth, they could cover the costs needed to save people “that are literally going to die if we don’t reach them.”

Source:ot.gr