SILVER SPRING, Md. (AP) — Tesla shares slumped more than 6% at the opening bell Monday after CEO Elon Musk said he would sell 10% of his holdings in the electric car maker — more than $20 billion worth by most calculations — based on the results of a poll he conducted on Twitter over the weekend.
According to analyst Daniel Ives of WedBush Securities, Musk owns about 23% of Tesla’s stock and has about $10 billion in taxes coming due to stock options that vest next summer.
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,” Musk tweeted.
Many on Wall Street assumed Musk would be selling closer to 5% of his stake, Ives said, but even doubling that number doesn’t cause him or his firm great concern. Ives said it is better to “rip the Band-Aid off now” and avoid speculation.
“Tesla remains in pole position to drive this EV adoption curve to the next level both domestically and globally with Musk & Co. leading the way,” Ives wrote in a note to clients.
Last week, Tesla shares hit an all-time intraday high of $1,243.49 per share. It’s the most valuable carmaker in the world with a market capitalization of more than $1 trillion. Shares fell 6.4% to $1,143.95 at the opening bell. They’re still up nearly 60% for the year.
The sometimes abrasive and unpredictable Musk said he proposed selling the stock as some Democrats have been pushing for billionaires 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?”
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 is known for roiling markets with his sometimes flippant and ill-advised tweets. Last Tuesday, Tesla shares tumbled more than 3% after Musk tweeted that a deal to sell 100,000 Teslas to Hertz had not yet been signed. Hertz said the cars were already being delivered.
Ives called Musk’s recent Twitter poll “another bizarre soap opera that can only happen to one company and one CEO in the world, Musk.”