Elon Musk’s tweeting is causing controversy again. This time, the world’s richest person has pledged to sell 10% of his Tesla stock after… a Twitter poll.
While billionaires don’t typically let tweets dictate their investment strategies, Musk has several motivations for his unusual approach. They range from slightly shady to risibly egotistical.
Being a better billionaire
Musk launched his poll amid rising anger about inequality. While COVID-19 has had a devastating impact on working people, American billionaires reportedly grew more than $2 trillion richer during the pandemic.
These extreme contrasts have triggered calls for billionaires to pay new taxes on unrealized gains in their assets. Musk, unsurprisingly, is not a fan of the proposals. Instead, he proposed selling some of his Tesla holdings to increase his tax bill.
“Note, I do not take a cash salary or bonus from anywhere,” Musk tweeted on Saturday. “I only have stock, thus the only way for me to pay taxes personally is to sell stock.”
A majority (57.9%) of the 3.5 million poll respondents voted “Yes” to the idea. Musk has pledged to abide by the results, which leaves him poised to sell an estimated $21 billion of stock.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?
— Lorde Edge (@elonmusk) November 6, 2021
Tesla shares tumbled after the poll closed, but the fall may only be a short one. In the longer term, Musk’s proposed stock sale could mitigate accusations that the tycoon avoids tax. It also provides a way to promote his company and personal brand.
Musk was gonna sell anyway
Musk has previously committed to selling a chunk of his Tesla stock this year.
“I have a bunch of options that are expiring next year, so a huge block of options will sell in [the fourth quarter of 2021] — they’ll have to, or they’ll expire,” he said in September at Vox Media’s Code Conference.
Musk added that when his stock options expire, his marginal tax rate will be over 50%. According to CNBC, the magnate faces a looming tax bill on his options of more than $15 billion, which already made a sale before the end of the year highly likely.
The Twitter poll gave Musk a chance to spin the sale as a public service. Attracting their support could also allay concerns that the move will have a negative impact on Tesla. This brings us to another potential motivation for the poll.
Moving the market
Musk is regularly accused of using Twitter to move markets. The SpaceX founder only needs 280 characters to rally floods of investors, surges in valuations, and SEC investigations.
Some pundits argue that the Twitter poll is merely another attempt to influence the market.
Scott Galloway, a bestselling author and professor of marketing at NYU Stern, said Musk was using the poll to conceal his plan to sell overvalued stock.
Using Twitter results as cloud cover to monetize $TSLA at prices he knows aren’t sustainable without outright telling the market he’s lost faith in its valuation https://t.co/sIaGKhk3Vt
— Scott Galloway (@profgalloway) November 6, 2021
Musk himself has previously called Tesla stock overpriced — and its value has risen dramatically since then. That could be another reason to start gradually selling it off.
However, Musk was not impressed by Galloway’s claims. He described the professor as an “insufferable numbskull.”
Musk also took a crack at Senator Ron Wyden, who’s called for a new billionaires tax. After Wyden dismissed the Twitter poll, Musk compared his profile picture to a cum face.
Why does ur pp look like u just came?
— Lorde Edge (@elonmusk) November 7, 2021
The jab had all the charm and humor that we’ve come to expect from Musk. It also illustrated another reason why Musk may have launched the Twitter poll: he has an insatiable desire for attention.
If the strategy fails to pay off financially, it should at least hasten his development into a self-described “Lorde Edge.”