World’s richest man Elon Musk sells billions in Tesla shares

The world’s richest man, Tesla CEO Elon Musk, has sold billions of dollars worth of his company’s shares, days after a Twitter poll.

Tesla CEO Elon Musk has now offloaded company shares worth US$5.7 billion, days after a controversial Twitter poll.

The world’s richest man is taking advantage of a meteoric Tesla share price rally that drove the company’s market capitalisation past $1 trillion in late October.

On Saturday, Mr Musk posted a poll on Twitter, asking if he should sell 10 per cent of his stock.

There were 3,519,252 votes and 57.9 per cent voted in favour of him selling the shares.

The billionaire, who has a net worth of about $US300 billion ($A407 billion), sold 4.5 million shares this week, according to regulatory filings made on Wednesday.

A batch of shares worth $US1.1 billion ($A1.5 billion) were sold on Monday in a bid to settle tax obligations after Mr Musk exercised stock options.

Elon Musk is cashing in on his Tesla shares. Picture: Saul Martinez/Getty Images

Mr Musk sold another block of company shares worth about US$700 million, filings showed on Friday.

Tesla’s stock price was down 2.83 per cent at US$1033.42 on Saturday morning.

Last Saturday, Mr Musk had tweeted: “Much is made lately of unrealised gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?”

“I will abide by the results of this poll, whichever way it goes,” he added in another tweet.

Not ten per cent

But the 50-year-old South African has not sold 10 per cent of his shares. To do so, he would need to sell millions more.

Before the sales, he still owned more than 170 million Tesla shares, about a 17 per cent stake in the company, according to the US Securities and Exchange Commission.

Mr Musk’s wealth has swelled with the recent surge in Tesla’s stock price, from about $130 at the start of 2020 to $1,222.09 last Friday.

Tesla’s share price plunged on Monday after the weekend poll, hitting his net worth by $50 billion, but the carmaker bounced back on Wednesday, rising more than four per cent to close at US$1067.95.

Mr Musk’s tweets on Saturday followed a proposal by US Congressional Democrats to tax the super wealthy more heavily by targeting stocks, which are usually only taxed when sold.

South African-born Elon Musk is the world’s richest man. Picture: Getty Images

The spectacle prompted by Mr Musk’s intervention on a very serious issue — income equality in the United States and who should pay for social safety net programs — was not well received by critics.

“Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” tweeted US Senator Ron Wyden.

“It’s time for the Billionaires Income Tax,” he added, drawing a personal insult in a reply from Mr Musk.

Why Musk is selling his stock

However, the real reason Mr Musk is selling the stock because of a US$15 billion tax bill.

CNBC reports Mr Musk was awarded options in 2012 as part of a compensation plan.

Mr Musk does not receive a salary or cash bonuses - his wealth comes entirely from stock awards and the gains in Tesla’s share price.

Those options expire in April next year - and to exercise them, Mr Musk must pay the income tax on the gain.

The bill could even exceed US$15 billion if income tax, a federal surtax on financial income, and capital gains tax in California — where Musk was a tax resident until the end of 2020 — are taken into account.

“It was well known that Musk had a big tax bill coming due from his 23 million stock options awarded in 2012,” wrote Dan Ives, an analyst for Wedbush Securities.

- with AFP