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Tesla tumbles after Musk sheds $5 billion in stock

Tesla’s stock fell slightly on Thursday after filings revealed that CEO Elon Musk sold about $5 billion in shares this week in response to his much-hyped Twitter poll.

After falling earlier in the week, the stock of the electric vehicle manufacturer ended the session down 0.4 percent at $1,063.51.

The share sale was Musk’s first one since 2016 and follows a weekend poll of Twitter users about selling 10 percent of his Tesla stake, which accounts for the majority of his estimated $281 billion fortune.

‘I don’t think investors are reacting negatively to the news,’ said Oliver Pursche, senior vice president and adviser at Wealthspire Advisors in New York. ‘If you believe in Tesla’s story, this should have no effect on you or change your mind,’ Pursche stated while reminding that Tesla stock is utilised in Wealthspire portfolios.

According to filings, Musk’s trust sold nearly 3.6 million shares of Tesla, valued at approximately $4 billion, and he also sold another 934,000 shares for $1.1 billion to cover tax obligations after exercising options to acquire nearly 2.2 million shares.

The transaction represents approximately 3% of Musk’s total holdings. The option-related portion of the sale was implemented in September, long before his Twitter poll.

Musk had a 23 percent stake in Tesla prior to the sale, including stock options. He also owns other businesses, including SpaceX.

Musk’s decision to sell his Tesla stock comes as U.S. Senate Democrats propose taxing billionaires’ stock holdings to help finance President Joe Biden’s social spending plan.

‘Elon Musk is not paid a salary; instead, he is compensated with large amounts of stock. At some point in time you have to take some of that concentration down,’ Art Hogan, chief market strategist at National Securities in New York, commented.

‘This is not an unusual occurrence. Because it is a high-capacity, attention-grabbing company, it simply attracts more attention,’ he added.

With nearly 800,000 options, or roughly 12 of Tesla’s open contracts, set to expire at the end of trading on Friday, some analysts predict an increased near-term volatility as investors and options dealers adjust to account for expiring positions.


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