How Elon Musk’s $28 billion Twitter poll crashed the Tesla share price
The price of Tesla shares fell as investors look to front-run CEO's sell-off.
Shares in EV giant Tesla retracted during Monday's trading session after its CEO said he would sell 10% of his shares following a Twitter poll.
The world's richest person, Elon Musk, took to Twitter on Saturday following increasing pressure from Democrats for billionaires to pay more tax.
Despite being a vocal critic of the plan in the past, Musk asked his legion of followers whether or not they thought he should sell 10% of his shares to pay taxes.
Following 3.5 million votes, 57.9% of responders voted yes.
Prior to the sale, Musk personally owned 23% of Tesla which has a market cap of more than US$1 trillion ($1.35 trillion).
In response to Musk's potential sell-down, the price of Tesla fell 4.92% during trading on Monday.
Following the pullback the share price is now US$1,162 ($1,569.43).
How much stock will Musk sell?
If the tech billionaire follows through on his promise to Twitter, he will sell US$21 billion ($28.3 billion) in stock.
Musk explained on Twitter that his on-paper wealth was not to avoid taxes but due to the structure of his package.
"Note, I do not take a cash salary or bonus from anywhere. I only have stock, thus the only way for me to pay taxes personally is to sell stock," he said.
Musk also told investors that "I will abide by the results of this poll, whichever way it goes," he tweeted out.
How will Musk fund the sell-off?
Musk noted previously that he would have to exercise a large number of stock options in the next 3 months that if he sold would generate a large tax bill.
"I was prepared to accept either outcome," Musk said, after the voting ended.
Much of the sell-off relates to market participants trying to front-run his selling off.
Why did Musk put up the poll in the first place?
The billionaire's Twitter poll was in response to a proposal by US Senate Democrats to tax billionaires' stocks and other traceable assets as well as filling in a loophole that has allowed rich Americans to defer capital gains taxes indefinitely.
The push comes as the party is looking to fund its large spending as the country looks to recover from the COVID-19 downturn.