World’s richest man says he will abide, and may have good reasons
A confluence of seemingly unrelated events, apparently, conspired to inspire Elon Musk to ask his Twitter audience if he should sell 10% of his Tesla Stock holdings, with the result being that he would pay tax on the realized gains.
In some ways this can be traced back to a ProPublica series of articles that highlighted the incredible ways that many of the upper echelons of the %1 richest pay little to no tax using various schemes that involve Roth IRA plans and unrealized gains in company shares, such as Elon Musk’s Tesla holdings.
When these details became public a wave of interest rose in the idea of a “billionaire” tax. While a bill to accomplish this by taxing unrealized gains directly did not pass, other various bills are still being considered.
Next, on October 19, David Beasley, executive director for the UN World Food Program tweeted; “Congratulations to @elonmusk for passing up @JeffBezos as the world’s richest person – worth a whopping $221B! Elon, to celebrate I’m offering you a once in a lifetime opportunity: help us save 42M people from starvation for just $6.6B!! Offer expires SOON.. and lives do too,”
This led to unresolved back and forth regarding the viability of this “offer” with Musk stating that he would accept the challenge, if “transparent” and “open source” accounting was provided and confirmed.
While it is possible that the Twitter poll and the 10% stock sale is a prelude to the UN proposal actually taking place, there are other events that relate and are likely also at play.
All time highs in Tesla make for an opportune exit by world’s cleverest money manager
While all this was going on Tesla shares have been flirting with all time highs. Very extreme highs after a years long tear that even Musk has called “too high”. And, his own 10% re-announced sale notwithstanding, there it is very likely that a pullback, correction or even bear market is rapidly approaching.
Therefore, what better time to take advantage of the incredible price and sell? Even after the tax costs the amount gained, when compared with a possibly more realistic share price that would eventually find an equilibrium, the cost of looking a lot better in the world’s eyes is not much.
The sale is projected to yield around 23 billion, which is based on a Friday’s price of 1,222 per share, 19.3 million shares and totaling, therefore, roughly $23,584,600,000.
This is not the end of the story, just the beginning
As have been noted elsewhere, Bitcoin plays a role in all of this, since Musk holds, via Tesla, around $1.5 billion in the crypto king. Others have speculated that he might buy more Bitcoin after cashing out the Tesla shares.
If, for any reason, Musk doesn’t or can’t make good on his Twitter pledge, naturally, all hell would break lose when various media and Twitterverse characters weigh in on the stunt.
Yet that would be likely less of an event than the massive PR earthquake that would arise if the sale is legit and if the UN World Food Program deal were to subsequently materialize. The various celebrations, perhaps pressure campaigns on other billionaires, and other random extreme reactions that flood forth, would be a true delight to witness.
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