How Elon Musk's Potential Sale Of 10% Of Tesla Stake Would Impact Stock

Tesla, Inc. TSLA CEO Elon Musk took the investment world by storm by running a Twitter poll on whether he should sell 10% of his Tesla stock.

With Musk leaving the decision to his Twitter followers, here is a look at how a liquidation of such magnitude can impact the high-flying Tesla stock.

How Much Is Musk's Tesla Stake: The Tesla CEO beneficially owned about 22.4% or 227.13 million shares in the company as of Dec. 31, 2020, according to a 13G/A filing done with the SEC in early February.

The value of 10% Musk's holding as of the stock price at close on Friday ($1,222.09) would be $27.78 billion.

Musk may have been prompted to announce the poll by recent efforts by U.S. lawmakers to enact a billionaire's tax. Democrat Senator Ron Wyden proposed the measure with the intention of changing the way the wealthiest taxpayers' investment gains are taxed. Currently, taxes are not levied on investment gains until the assets are sold.

In response to Musk's poll, Wyden said in a statement released late Saturday, "Whether or not the world's wealthiest man pays any taxes at all shouldn't depend on the results of a Twitter poll. It's time for the Billionaires Income Tax."

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How Tesla Stock Will Be Impacted: Insider sale typically is a negative for stocks, as investors fear trouble brewing, especially when insiders liquidate in droves. It is to be noted here that Musk's brother Kimbal Musk sold 88,500 shares of Tesla, which was disclosed Friday.

It is here that the Rule 10b5-1 trading plan insulated insiders from any trouble arising out of stock sales. The rule allows insiders to sell a predetermined number of shares at a predetermined time.

Since the Tesla stock crossed the $800 threshold on Oct. 12, it had gained a whopping 52%. Investors could use the weekend's development as a reason to take profit from recent gains.

Tesla Tokenized stock was trading down over 5%, according to CoinMarketCap in reaction to Musk's Twitter poll.

As of Sunday morning, about 57% of over 3 million poll respondents were in favor of Musk offloading the 10% stake.

With Musk promising to abide by his proposal, whichever way the poll results go, Tesla stock could be in for some selling in Monday's session.

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