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Elon Musk loses $50 billion after Twitter poll misfires
Investors dump Tesla stock ahead of a possible stake sale by company chief
Elon Musk. Photo: File
Elon Musk lost $50 billion in 2 days after Tesla Inc shares plunged for a third straight day on Tuesday.
Tesla CEO Elon Musk is now worth $323 billion, according to the Bloomberg Billionaires Index. Musk's loss comes as investors dumped the high-flying stock ahead of a possible stake sale by company chief.
It’s the biggest two-day decline in the history of the Bloomberg Billionaires Index, and the biggest one-day fall after Jeff Bezos’s $36 billion plunge following his divorce from MacKenzie Scott in 2019.
The electric-car maker’s shares were recently down 11.6% at $1,026. They were on track to shed some $133 billion in market capitalization, far more than the total market value of Ford Motor, in addition to losing nearly $60 billion on Monday.
The rout comes after Musk asked his Twitter followers over the weekend if he should sell 10% of his stake in the company as Washington proposes to hike taxes for the super-wealthy. Nearly 58% said they would support such a sale.
“People are anticipating that he is going to come into the market and start selling shares. They’re trying to get ahead of that,” said Dennis Dick, a trader at Bright Trading LLC.
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Musk could time the proposed sale to coincide with a federal tax bill of nearly $11 billion that would be triggered by exercising a chunk of his Tesla stock options worth $26.6 billion as of Monday close.
Tesla’s shares are up around 47% year-to-date, following a blistering run in October.
While the stock sale could solve a major tax headache, Musk’s tweets raised questions about potential violation of his settlement with the U.S. securities regulator. He was fined $20 million by the U.S. Securities and Exchange Commission (SEC) for tweets in 2018 and was required to step down as chairman.
After a sharp runup in Tesla’s shares, “Musk has used the now moot political debate on billionaire taxes as an opportunity to monetize billions of his wealth without reflecting a negative view on the company or its share price,” wrote Michael O’Rourke of Jones Trading in a late Monday note. “It is highly unlikely that there are institutional buyers for Tesla shares at current prices.”
Kimbal Musk, Elon Musk’s brother, on Friday filed to sell 88,500 Tesla shares worth $109 million.
Investors will be closely watching SEC filings from Tesla for any details on Musk’s plans. SEC rules give companies four working days to report major events.
Meanwhile, rival electric-vehicle maker Rivian Automotive Inc is poised to price its roughly $10 billion initial public offering later Tuesday.
Backed by both Amazon.com Inc and Ford Motor Co , Rivian last Friday boosted its offering’s price range, as investors bet on the company to be the next big player in a sector dominated by Tesla.
With inputs from Reuters.
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