On Monday, Tesla’s stock price fell after CEO Elon Musk announced he would sell a 10% stake in the electric vehicle producer.
Over the weekend, billionaire Musk conducted a Twitter poll in which he asked: “Given the recent emphasis on unrealized gains as a means of tax avoidance, I propose selling 10% of my Tesla stock.” Are you in favor of this?”
The poll, which began on Saturday, garnered almost 3.5 million votes. 57.9 percent voted in favor of Musk selling a 10% stake in his company, which is estimated to be worth roughly $21 billion. According to Bloomberg, Musk owns approximately 170.5 million Tesla shares.
Musk stated on Twitter that he would “abide by the findings of this poll, regardless of the outcome,” and that he was “prepared to accept either decision” when the poll concluded.
Shares of the electric vehicle manufacturer plummeted in Germany on Monday morning and are expected to continue to decline when New York trading opens later today. Telsa fell 7.8% in Frankfurt and 7% in New York’s pre-market.
According to Michael Hewson, chief market analyst at CMC Markets, “early indicators are that the shares may tumble sharply on the open, but it’s not as if Musk is about to dump them on the open market.” Instead, he may very quickly gradually introduce them into the market.
“The fact that he has buy-in from his social media supporters will help lessen the impact of the sale, and while we may see some initial weakness, the shares are due for a correction anyhow.”
Tesla’s stock is near all-time highs, having gained nearly 40% this year and just surpassing the $1 trillion milestones.
“What does this signify for Tesla?” said Russ Mould, investment director at AJ Bell. Nothing. It does not affect the firm’s strategy, business model, competitive position, financial sheet, or supply/demand dynamics in its market. These are aspects that investors consider when determining whether or not to invest in the company.
“The only thing that has changed is that the shares are now 7% cheaper than they were on Friday, making them 7% more attractively positioned if you believe in the investment case.”
Musk has a history of using tweets to influence Tesla’s stock price. In 2018, regulators censured him for tweeting that he had obtained money to take Tesla, private at $420 a share. There was no bid. Musk was later instructed to provide supervisors with control of his Tweets before posting them.