By Jawad Abbas, Staff Writer
The richest man in the world, Elon Musk, has decided to sell 10% of his Tesla shares.
On October 26, David Beasley, the director of the UN’s World Food Programme declared that it was time for the ultra-wealthy to “step up now, on a one-time basis. Six billion dollars to help 42 million people that are literally going to die if we don’t reach them.” Beasley specifically named Elon Musk and Jeff Bezos, the two richest men on the planet to encourage them to “step up.” On October 31, Elon replied to a tweet by researcher Dr. Eli David who reposted David Beasley’s statement. Musk’s reply stated that “[if the] WFP can describe on this Twitter thread exactly how $6B will solve world hunger, [he would] sell Tesla stock [immediately] and do it.” The World Food Programme never ended up replying to the Twitter thread.
On November 6, Elon Musk posted a poll on Twitter asking his followers whether or not he should sell ten percent of his Tesla shares. Musk stated that his reasoning for considering selling his shares was due to “[the public seeing his] unrealized gains being a means of tax avoidance.” With over 3.5 million votes, the results were in. 57.9% of voters voted for Musk to sell his shares and 42.1% of voters voted otherwise.
On November 4, two days prior to Musk posting his Twitter poll, Tesla shares had reached an all time high, closing at $1229.73 (USD) per share. Following Elon’s tweet, when the market opened on November 8, Tesla shares plummeted by 4.9%.
Much was made of Elon’s decision to sell his Tesla shares. “The Big Short” investor, Michael Burry, accused Musk of “selling his company’s shares not because he wants to pay taxes or appease regulators but because he knows they’re overvalued.” Burry has publicly bet against Tesla, describing the electric vehicle producer as “a bubble about to burst.” Burry isn’t the only investor who is bearish on Tesla stock, with Berkshire Hathaway CEO, Warren Buffet, also shying away from the automaker’s stock. When asked if Buffet would invest in Tesla stock, he simply answered “no.”
Tesla’s CEO may or may not have an alternative motive behind selling his shares, but if one thing is certain, it’s that he is considering selling more shares in the near future. On November 13, Bernie Sanders chimed in on his opinion of taxing the wealthy more over Twitter. The Senator tweeted that “we must demand that the extremely wealthy pay their fair share. Period.” Musk being the “Twitter Troll” that he is, decided to reply to Sanders’ tweet with a few of his own. Musk’s first tweet read “I keep forgetting that you’re still alive.” Musk’s second tweet read “[want] me to sell more stock, Bernie? Just say the words…” It would appear that Elon’s tweets are sarcastic, but what if Tesla’s CEO does decide to sell more shares or potentially close his position as a whole?
As it stands the probability of Musk selling more shares is unlikely, and the potential of entirely closing his position as a whole seems next to impossible. Another thing to look at is how Tesla’s stock recovers following the CEO’s decision to sell his shares. Investors such as Cathie Wood, CEO of Ark Invest, have also joined Elon Musk and liquidated some of their Tesla shares, but believe the stock still has huge upside. Ark Invest has set a price target of $3,000 on Tesla stock before 2025.
Even with investors choosing to cash out their shares, Tesla continues to innovate and surpass consumers’ expectations of the automaker. Many are awaiting Tesla’s future projects with the “Roadster,” “Cybertruck,” and “Tesla Bot” to name a few. Could Tesla stock continue to reach new highs or will the “bubble” finally burst?
Photo by Charlie Deets on Unsplash
FINANCIAL MARAUDER 