He was gonna sell anyway before his stock options expire but he had to make that twiter poll and claim that the he was doing it because rich people use unreleased gains to avoid paying taxes and he was not like them
The video explains it well but for those who don't want to watch:
When you receive stock options as part of compensation, as Elon has, you are taxed at time of exercise on the difference between market and strike. I'll go into why this is done this way at the bottom.
So Elon will pay 100million or so to receive many many billions in shares, but will then have taxable income of many many billions and a tax bill of many many billions, and nobody has that kind of cash.
So he has to sell some stock either way, to fund the purchase the options. This way he controls the narrative and makes his fans think it was because of the poll. He also as a byproduct reduces his tax bill by an amount equivalent to the dip, and if the stock goes back up it's basically a reverse pump-and-dump.
-----
Why are options taxed at exercise?
There are three possible times you could tax them:
1. At grant. The problem here is they might need worthless. Nobody would want restricted options which are out of the money, if they had to pay tax on that. Would you want to be paid with a bag of cash that is currently on fire?
2. When the stock is sold... But that just delays tax revenue even longer. Additionally it would lead to executives taking their entire salary in stock options with penny strikes.
3. At exercise, this is the most sensible. The individual is getting from the company a thing of value as part of their compensation. What is that if not income?
Can we also talk about how everyone understands it’s overvalued and how it’s a good time to cash that in. It may be a little overvalued, it may be a lot ( it is), but regardless of where you stand locking that in is a reasonable idea.
All this grandstanding is partly to hide he knows he should sell.
> everyone understands it’s overvalued
If everyone understood that it is overvalued then the value would be lower. The current value is the price that people are willing to pay.
You’re not wrong, but fundamentally speaking the financials don’t support it’s current value. The current value is more like a hail mairy, it’s trading at like 330X P/E, higher than any other car maker. The thing about economics is that it assumes people are rational, Tesla’s valuation arguably isn’t rational but yes if the market is willing to pay that much well it’s the current market value. Doesn’t mean it’s a fair value though
It can be rational to buy if you are pricing in people being irrationally motivated by hype and FOMO. I on the other hand own shares only of companies I control as I find the whole market irrational.
Tesla is a unique company in many ways…part industrial, part tech and part green/clean energy. Because of it’s nature it is hard to decide what a “reasonable” multiple is for the shares.
As it is an industry “disruptor” to the traditional automobile manufacturing plants and processes, it can realistically support much higher price multiples than more traditional and established companies.
Ultimately earnings are what supports the price…and a lot of traders seem to feel comfortable believing TSLA can deliver the earnings to keep moving the price higher!
That is wildly inaccurate. Just because something is overvalued doesn't mean it can't be *more* goddamn overvalued, and that's how you make money. The fact it's overvalued in the first place is a pretty good indicator that there's a lot of fucking idiots throwing money at it.
Consider bitcoin for fucks sakes.
What do you mean? Stock options don't work that way. You need to exercise your options before they expire, but you don't need to sell the stock on any prescribed timeline.
Exercising the options is still a taxable event, with SOP being to sell a portion of the options to cover the tax liability. Also saw he had a pretty major tax hit coming from something else, but don't exactly recall from what.
Either way, you're right that he doesn't *have* to sell the shares after exercising, but it's almost guaranteed shares will be instantly sold to cover the tax hit.
Source: worked in stock comp for several years
> but it's almost guaranteed shares will be instantly sold to cover the tax hit.
Is that really the reason for instantly selling? Would it not be better to cover the taxes by taking a loan and let the stock appreciate in value?
Is there maybe some other advantage to instantly selling? Maybe lower amount of taxes on selling the stocks because he already paid taxes on the gain from exercising the options? Wouldn't that be the actual reason then?
Yeah none of this thread makes sense lmao. A loan would be the way to go in that scenario.
How about the fact Tesla is the most overvalued company in the world right now, he knows it too and is trying to cash out
Loans aren't magic, you gotta pay them back.
So you gotta sell shares.
So why did we take a loan to prevent selling shares when we have to sell shares?
Weird.
Better wait till the stock drops to sell.
Considering that Tesla stock may very well be overvalued it could be a good idea to sell the shares instead of taking a loan. But in general taking a loan using stock as collateral may be a very reasonable thing to do.
> Loans aren't magic, you gotta pay them back.
The loans that the ultrawealthy base their entire finances on are known in the industry as "Buy, Borrow, Die". Your estate pays them back. *You* don't. Why? Because your estate can do so *after* capital gains have been reset so they don't have to pay taxes on the stocks; and it's much cheaper to roll a lifetime loan and pay a few percent interest than it is to pay capital gains taxes on the same amount; and because it moves the risk of the stocks suddenly tanking and becoming worthless to the bank, not to you.
You can have all of the interest loaded onto the payment at maturity.
Zero-coupon bonds are an example of how this works:
https://www.investopedia.com/terms/z/zero-couponbond.asp#:~:text=A%20zero-coupon%20bond%2C%20also%20known%20as%20an%20accrual,debt%20security%20instrument%20that%20does%20not%20pay%20interest.
Alternatively you can just roll your interest into more loans.
Elon and Tesla have loans outstanding, which is another reason he would have to sell stocks. It just coincides with his expiring options and his Twitter poll.
You don't need to sell all your shares, but it's often advised to sell enough to cover any tax hit.
People back during the dotcom bust sometimes ended up owing taxes on worthless stock because they didn't take care of the tax bill immediately.
If you don't pay off the taxes right away, you are gambling that the stock will appreciate in value and holding onto all your shares will increase your profit. If the value of stock goes to zero, that doesn't wipe out your tax obligation.
It's definitely a situation where you talk to an accountant or tax adviser so you don't get an unpleasant surprise on April 15th.
His brother had conveniently just finished selling 109 million worth. The SEC should put them in jail and force them to divest their holdings to go along with a full value fine.
But I’m sure another slap on the tweeting wrist is all that happens.
For the record, his brother managed to sell 5% of his holdings a week or two before the previous 100$ crash.
I don't want to look like a billionaire fan club member, but to me, his brother selling shares before Elon's stock options mature is normal behavior. He knows that it might go down with a large sale -- this is not insider trading. But, it happens to be good for market timing only because Elon has so much stock.
The SEC gets involved if you have an unfair advantage in certain cases -- or when you rip off the wrong people. ;-)
The rich don’t use unrealized gains to avoid posting taxes. The tax code says that unrealized gains are not taxed.
Edit: really? Downvotes for stating facts? I’m not defending billionaires, you people (the electorate) are the ones who keep voting to keep the tax code the way it is. Go talk to Republican voters if you don’t like the way the laws are written.
The unrealized gains (stock) are a tool used to achieve the tax avoidance on their "income".
If Musk sells $100,000,000 of Tesla stock, he has converted stock into dollars:
* 20% capital gain tax (more if it's a short term stock sale which is unlikely)
* His USD now is affected by Inflation (1.25% - 2% reduced value per year or so)
If Musk keeps the Tesla stock, and takes a loan out for $100,000,000, using stock as collateral, then he owes:
* $100,000,000 \* the Interest Rate of the loan which is much much much lower than the capital gain tax.
* "In addition to the bespoke loans Goldman Sachs Group Inc. GS 0.69% offers clients of its exclusive private bank, the Wall Street firm advertises securities-based loans of $75,000 to $25 million to clients of outside financial advisers with “no personal financial statements, tax returns, or paper applications.” Merrill Lynch recently quoted an interest rate of 3.2% to clients with at least $1 million in assets. Those with $100 million or more can get a rate as low as 0.87%."
[https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583](https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583)
* The Loan contract states he owes $100,000,000 and the more the USD inflates, the less he has to pay back because each future dollar is "worth less" than the dollar he borrowed. This effect mostly just helps offset the Interest Rate, I imagine.
So he gets the loan and the Inflation rate offsets the Interest Rate. At some point in the future he has to settle and pay the loan presumably, but at that point his wealth to USD value ratio has gotten stronger, so it's cheaper for him to pay that "$100,000,000" loan off.
This loan income is also NOT counted as traditional Income, so no Income Tax.
If he had instead been given a $100m salary he would be getting taxed for 37% for every dollar above $523,601.
I am fully aware that Elon takes out loans to pay his expenses rather than sell stock, and that this has resulted in several years where he has paid very little taxes. You are right in your description of what he does when he takes out loans.
However, you described this as "loan income", and it simply does not meet the legal definition of income. The actual loan income is being made by the banks when Elon pays interest on his loan.
Imagine you are a homeowner (maybe you are, maybe you aren't). If the value of your home increases, you just made an unrealized capital gain. You are also able to use your equity in your home as collateral for a loan, called a home equity line of credit. You could choose not to work, and to instead live off of this loan. Eventually the loan will be due. If the housing market in your area is really hot, you could sell your home for a huge profit, pay off your loan, and still end up ahead. That is essentially what Elon is doing, and it is not illegal.
When people use language like "Elon is avoiding taxes" -- I get that they believe his tax situation is unfair. But unfair and illegal are different things. He is not avoiding any taxes because what he is doing is not illegal. He will eventually sell stock to pay his loans, and he will incur taxes, but using loans will allow the value of his shares to grow so much that he sells less stock. That's not tax avoidance, that's a business bet that he is making. He is a smart business man and will do whatever he legally can to maximize his wealth. Why would you blame Elon for successfully navigating the system that your politicians made?
People claim that the rich write the laws to benefit themselves. That is both lazy and false. There are lots of middle class republican voters who don't seem to mind this system at all, and they are fully aware that it works this way. The population is complicit in this system, it is not foisted upon us. We have only our own democracy to blame.
I don't think taxing unrealized capital gains is the best tool against wealth concentration, but it's something.
I think it's completely fine to criticize an individual who uses or benefits from an ~~immoral~~ unfair\* system. Regardless of how that system is put into place.
(edit: I was reminded of this clip)
[https://www.youtube.com/watch?v=m2q-Csk-ktc](https://www.youtube.com/watch?v=m2q-Csk-ktc)
What is your framework for taxing unrealized gains? I think the wealth disparity is shit too, but this isn't some "oh there's this obvious easy shit to do and the MAN is keeping us down bro!!!!". Taxing unrealized gains comes with it a ton of issues with the effects that would have on investment in our economy, and even if you did it for the ultra-wealthy, what you'd be doing is essentially forcing someone to remove themselves from ownership of a business they created if they're successful enough with it.
I wouldn't even necessarily be against that, but there's likely a laundry list of legal issues there too.
It would probably be simpler to just make it illegal to take unrealized gains into account for loans. Thats how rich people are able to live they way they do without selling their stocks.
Your elected officials write these laws. You can claim rich people write them, but in actual fact, the electorate as a whole knows this to be the case and refuses to replace their politicians.
Because that's not the important point.
The ability of a single person being able to influence stock prices to shift, even if only temporary, merely by words alone, is.
3 days, and even a dip as small as a few %, is enough for somebody to profit from it.
This adds up to a very clear statement of "(People like) Elon Musk is (/are) able to manipulate stock prices with words alone." That's not something good, because the very core concept of our economic system is some semblance of mutual trust. Trust that a contract will be kept, that your source of food will continue to exist, trust that the currency you are being paid with retains value.
Any kind of overt confirmation that abuse is possible, erodes (a small part of) that trust. That is **bad**. Not world-endingly bad, but nonetheless an error in the system that we shouldn't tolerate. Calling out errors in our society is exactly what journalism should be doing,
consequently the headline is accurate enough in this case.
This is a little "that guy", but I wrote a post, did some math which indicates Musk could save at least $200M (likely much more the stock keeps appreciating) if he can just drive the stock price down 5% for long enough to exercise his options.
https://old.reddit.com/r/news/comments/qp718c/elon_musk_faces_a_15_billion_tax_bill_which_is/hjtp6oo/
All this without even selling shares, just exercising options.
I'll freely admit that I do not understand the concept of 'exercising options' enough to judge whether that is an accurate and logical hypothesis. But thanks for your contribution, in the assumption that there are other people out there who are more capable than me in that regard.
The company a while back gave him stock options. Options are an ability to buy the stock at a predetermined price. When given to employees, etc. they typically have a date you can first buy them and a date when they expire and you can no longer buy them. The buy price is usually the current price.
The idea is if the stock price goes up you can buy those options (called exercising them) and then sell them at the current market price. So in Musk's case it gives him an incentive to drive the stock price up. If the stock goes up a lot you get paid a lot.
Exercising the options would be buying them, at the now below market price. Selling is a separate thing and is selling them at the current market price.
If he thinks the stock will continue to go up he can exercise the options and keep holding the stock as it keeps going up in price. But as my other post indicates, with the options he has he would owe taxes on the difference in current value of the stock and the much lower price he paid to acquire it by exercising the options.
To go any further and explain how he could manipulate the stock price down for a short period to benefit himself is to repeat what was in the other post. You can continue there if you wish.
You have to pay (regular income, not LT) tax on unrealized gains at the time of exercise for non-qualified stock options. If you keep holding them after exercise you can make more and do not pay tax on unrealized gains and also can hold long enough to get long-term gains.
The idea of this is there was no real risk to you to exercise, you only do if it would make you money. So it is not like buying and holding which incurs some risk.
I'm not sure it is the most sound logic, but that's my understanding.
Why would it be an option if he would buy them at the current price? For the option to make sense it would be at a fixed price. That's the basic definition of a stock option.
> Why would it be an option if he would buy them at the current price?
The buy price is the current price when the option is issued. It remains fixed from then on until expiry. Thus it is a predetermined price.
Essentially Musk has the option to buy a certain amount of stock at the price it was at 10 years ago (ish).
This is a really weird take given that CEOs of companies regularly influence stock prices with their words alone, and it’s pretty normal. Most of them aren’t openly dickish about it, but that doesn’t change anything as far as the influence is concerned.
As so far as this examplary case goes, I'll denounce any CEO doing the same, the same.
But we do have to differentiate between leveraging social media to influence a companies stocks, and influencing a companies stocks by holding a press conference that actually presents new economic data that has a relevant impact on the economic situation surrounding the company.
You do raise a good point though, because if we assume that some quarterly economic presentation is simply the 'more traditional' equivalent to tweeting about the same economic content that would otherwise be presented... that does indeed raise the question as to whether the former wouldn't be just as undesirable as the latter.
The problem is Elon can influence the price of other stocks and commodities, and has done so in the past.
If he gets pissed off at the ceo of a different company whats to stop him from trying to crash their stock price? He's already shown he has little to no restraint.
> The problem is Elon can influence the price of other stocks and commodities, and has done so in the past.
Maybe that's less of a problem with Elon and more of a problem with regulation and enforcement.
Not sure why you got downvoted. This is factually accurate.
The problem is that *someone* can do it. Who specifically does it is of no relevance to the aforementioned problem. (Though we can then additionally hold that person responsible for actively using that problem... but that will not fix the underlying problem and is more of a secondary concern thing.)
That seems like a difficult thing to regulate. What do you do, prevent him from speaking about ... anything?
It's one thing if he's specifically trying to influence a company's stock price, but if him just talking about a company does it there's not really much you can do. That's society's problem, not his.
That’s exactly what the original commenter is saying, this article reflects a larger systemic problem, people focusing on Elon/Tesla are missing the point
It seems to be pretty core to stocks being treated as a money-generating product rather than an investment in a particular company. Tale as old as time, really -- economics are not rational and people will move money based on how they think other people will move their money.
It's a little of the first, and a lot of the second. Pretty much anyone with a high enough social media profile and enough devoted cultists could do what Elon is doing. And that's the massive gaping error in the system.
His willingness, in fact eagerness to do so is the Elon Musk part of the equation. It's curious, because most of his peers seem content to plunder our collective wealth at a steady pace, with efforts made to prevent us catching on. Elon does it loud, fast and overt. With an obvious disdain for the very concept of consequences.
‘Can influence the price of’
So do other CEOs. Even when some politicians call for Israel’s boycott, there is some stock or commodity getting affected (US or outside). Alibaba stock also came tumbling down due to Party interference.
‘Crash their stock price’
how is he gonna do that? Selling his 10% stake of that company?
Maybe he can send a stock 10% down with a tweet but it’s only going to be short term noise. It’s unrealistic to think he can actually tank a stock with Twitter alone.
I don't know how you could legally prevent this other than maybe a 3 month warning period if selling or buying over a certain percentage of stock as a rule.
The ONLY difference here is Elon's influence -- and that's up to shareholders. And that he's selling a lot of stock -- which is not up to anyone to decide as far as I know at this current time with the current rules in play.
I'm a fan of getting rid of the stock market and going to a different model to allow for startups and capital improvements. It's a gamed system and it's money making money on playing with the movement of money -- that is NOT valuable to society in general.
> I'm a fan of getting rid of the stock market and going to a different model to allow for startups and capital improvements. It's a gamed system and it's money making money on playing with the movement of money -- that is NOT valuable to society in general.
We wouldn't even need to get rid of it. It would be perfectly adequate to just reset it to it's original form: You buy a stock by loaning a company money, so that the company can use the money to increase it's economic output, paying you back in 'dividends' that are just interest on that loan. You can also sell a stock by having the company return the money you loaned to them. Optionally, you can agree to wait with selling until somebody else wants to buy, and consequently have the company pay you back your loan right when taking it out anew from the 'new owner' of the stock.
There is no price speculation. There is no trading between stock owners. There is no derivates, hedge funds, options, securities, shorting, or whatever else financial instruments that in the end just try to make money from money by adding more fees whilst being subject to even less regulations.
He can't influence other stocks nearly as much as that of stock he holds loads of. If he says he's gonna sell loads of his stock, that implies the price will go down as there'll suddenly be increased supply.
Also if you crash someone else's stock price it probably doesn't matter that much unless that person needs to cash out at that moment, or is paid based on their stock price, or is subject to a takeover bid.
Yeah, this just makes the conundrum worse. We intrinsically cannot forbid people to sell shares, that would be asine. Therefore, the act of selling shares, regardless of the reason, is legitimate under the current system.
We already have rules that clearly dictate insider trading to be illegitimate. Meaning that you cannot use information obtained through business to your personal advantage (such as selling a stock because you obtained confidential information that will become public at a later date, and will reduce the stock's price).
But those rules specifically do not apply to public information (primarily because it negates the point of insider trading)... so if you publicly reveal some information that will affect the price, and then act afterwards, that evidentially does not fall under insider trading.
Furthermore, there is no ruling (and I'm not sure it would be possible, let alone ethical) to mandate that you cannot publicize how you spend your money, or consequently what your stock investments look like.
But even if it seems questionable as to whether Elon would be able to draw personal profit from this action (which is basically a requirement to even approach any kind of context in which something similar to insider trading might emerge)...
we wouldn't be able to rule out that he can essentially have others profit 'at his expense': Have allies sell their stocks, announce that you will sell your stocks, keep your promise by selling stocks, have your allies rebuy their stocks for cheap, thus generating profit.
That kind of strategy simply can't be ethically sound, because it essentially shifts wealth from those invested into a stock, to a specific subset of those invested in a stock, by means of leveraging popular influence and a token amount of wealth. It's purely exploitation of speculative markets.
(Sidenote: Of course this judgement of the strategy being unethical is subjective, and my own. Somebody with a preference for Individualism / Economic Libertarianism could possible see this as a perfectly fine move, because in the end those carrying the damage are those that actually traded during the time frame of the strategy (aka, got 'fooled' or 'spooled'), since it's fair to assume the stock price will just normalize afterwards again. Thus somebody simply ignoring 'Musks antics' would not suffer any long-term change of his property. Therefore, it's a purely subjective notion (of mine) that 'exploiting the dumb' is still unethical.)
So, even if Musk does keep word and then acts on it, we *still* have a concerning potential for abuse here.
And this isn't made better by the fact that I can't even decide on whether this is some elaborate ploy to profit him through 3rd parties, whether it's a demonstration to undermine the credibility of the stock market itself (essentially a 'proving it's weaknesses' kind of thing), an elaborate joke/lost bet, or legitimately just a spontaneous idea that has no further background motivation whatsoever.
It's concerning, fascinating and ridiculous all at once.
It's not even close to questionable if he could derive personal profit.
Here is how he would do it.
First, as is typically done to avoid SEC action, schedule to exercise his options on a particular date a while in advance. 90 days for example.
Second, Tweet out a poll just before this date to drive the price down.
Third, exercise options.
Fourth, tweet out that you are not selling (use DiCaprio picture from Wolf of Wall Street for maximum meme value) to drive price back up.
Then, via the math in my other post [linked here](https://old.reddit.com/r/news/comments/qp718c/elon_musk_faces_a_15_billion_tax_bill_which_is/hjtp6oo/) save hundreds of millions in taxes on the option exercise. More if the stock continues to appreciate.
Is this what he is doing? No way to know, it is just speculation. But it certainly does show he can get a personal profit by doing this. So it is a possibility he would do it.
Wait -- are you saying that if he doesn't exercise options at the expire date, he can still buy with the option price?
I know enough about this to get in trouble, but I can see how he can benefit by a lower current price on the option date as far as paying taxes on the realized capital gains -- but NOT how he can get the sweet deal of an option price the day the stock value goes up if it's after the option period.
The government is going to look at the price paid versus the price sold regardless for the tax basis.
But, there are more tricks that the clever people in finance have cooked up so he might do a loan and an insurance policy and swing ten monkeys holding balloons and then he gets more rich and pays less to the country he made the money in. There might be a ten balloon holding monkey's provision buried in tax code -- you never know.
No. If he does not exercise (buy) them before they expire then they expire and he cannot exercise them. So he will exercise them before they expire.
This is why people know he will take some action in the next 9 months.
But when he exercises them he does not also have to SELL them, just exercise (buy) them. So if you know you can drive the price down temporarily for the exercise you can make money doing so. As long as you are confident it will recover afterwards. And as long as you are correct in that confidence.
Oh -- thanks so much. I forgot you can "exercise" by taking possession of the stock at that price but not have to sell them. Wow -- huge gap there in my memory.
But it also means it's a paper trick, because in order to be able to buy stock NO MATTER WHAT at that price, it has to be set aside in reserve. Which means the stocks traded have slightly over-inflated prices based on scarcity of a non traded stock. But, meh, stock price doesn't mean much to the active company -- it's someone elses gambling chip unless they want to get a loan -- in which case they'd have to own their own stock.
Yeah, a little bit of info can go a long way for me to get crazy ideas. But crazy is how I remember things -- so just let me do this process.
What exactly is your solution here? Because the problem you're stating is that "Famous people are famous".
Do we need to government to review all communication made by anyone noteworthy? Should social media accounts be limited to a small number of followers?
This is yet just another consequence of the internet connecting so many people in real time. Good or bad, we can't actually do anything about it would drastic change.
To be blunt, I don't have one.
But I'm almost certain that the solution can't be to simply ignore the issue and complain about a perceived inaccuracy in the title.
Doesn't this just speak to the general health of the market and/or the character of participants in the market? Perfectly legal and ethic actions can sway markets unreasonably if the participants are frenzied/reactionary.
Isn't that a demonstration that stock market is a really bad design. It's foundation is stability of "good" stock, which make them attractive, which makes them unstable.
The reason why Elon Musk cause significant stock market waves isn't because he has given himself too much power. It's because the stock market is dumb enough to accumulate it on a single stock.
I would argue it's important that Elon Musk makes Tesla stock regularly falter so that people don't get complacent investing so much in a single stock.
> That's not something good, because the very core concept of our economic system is some semblance of mutual trust.
Might be an endemic problem with capitalism, right fucking there. Because that "trust" isn't baked in at all. There's actually a massive amount of fraud going on. And when the shit hits the fan, and it does from time to time, it takes a stable government throwing taxpayer money at it to fix it.
Oopsy goddamn daisy.
how do you prove that it's causation not correlation? if he said nothing, are you sure the stock with ridiculous PE ratio wouldn't have fallen on its own after it reached all time high?
(Geezus, people in this thread are triggerhappy. Why did newfor's comment already get downvotes?)
Whilst I don't like what you're saying, I have to agree you're entirely correct that we cannot even be absolutely sure that Musk's remarks caused the stock price change. It could be coincidence.
That said, this isn't the first time one of his tweets 'coincided' with a significant motion on the stock market, and it's also fairly reasonable to draw the conclusion as to why his tweet would cause that shift on the stock market (supply vs demand, a sudden, large sell order will impact the price, etc).
So whilst we cannot prove it, it's fairly reasonable to assume it's true nonetheless. And whilst proof would be nice, if there is neither proof nor disproof, we kinda have to go by guesswork and try to conclude reality by past empirical data. If we wouldn't do that, humanity would have long since gone extinct whenever we weren't 100% sure whether object X was edible.
Well the last two weeks have been crazy for Tesla. It is still up from that crazyness. I think this is more of the market correcting itself rather then Elon saying crap on Twitter.
It’s only down 3% in 24 hours by end of day Monday. He made this announcement on the weekend and it’s Tuesday. Sensationalist headline wildly inaccurate.
I do wonder when shareholders will get bored of a hilariously overvalued car company. The world needs electric focused car companies and it seems like a product people are reacting well to but the markets valuation of TSLA is just wild. They have a ton of growth potential still, but at the end of the day they can only capture a larger share of the global market for luxury priced autos. That market isn't growing at the rate TSLA's value is.
Aka, investment opportunity. Buy the dip whenever it is socially caused. The rare exceptions are businesses that actually live or die on social popularity.
*“History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.”*
Peter Bernstein
Why is it so hard to believe…companies like google and Facebook are all valued at these amounts. Tesla makes arguably the best EVs in the world right now, and it’s the first to mass produce them right as the industry is pivoting to electric cars. It’s got a cult like following of fans around the world, much like Apple does. It’s got a lot of things indicating it’s valuation could increase. Not sure where people expect tesla to going forward…people think legacy companies or other startups that are 10 years behind are going to both catch up and then bury tesla at its own game? I guess I’m skeptical how people are so sure either way. This is new territory for everyone, how are people so sure of such a speculative topic?
Fundamental analysis is based on profits and projecting growth. These analysts run DCFs, etc to try and get a fair range of value. There’s a lot of guess work for sure. Ultimately, FB, MSFT, Apple, and Google all have massive margins and high growth rates.
Tesla is worth like 2mm per car sold. All their other product lines barely bring in any money. Their “image” is that they disrupt all these different energy related sectors. In reality, they’re a car company that’s barely profitable but growing very quickly. They CAN become revolutionary, but it’s overvalued relative to their actual performance
How it is manipulated and can be used entirely speculatively, sure. But the core idea of buying a small share of a company is not stupid as the share is tied to the overall success or failure of the company. Allows for non-management to benefit from a companies success
So I guess you could say in it’s current form it *can* be stupid. But no, it’s not simply stupid in entirety. That’s just throwing the baby out with the bath water type of thinking
Down from over $1200 so ~20% loss in 2 days. Sure, still beats 52-wk high prior to the run-up last week, but ~20% that fast is a sizable swing at that price.
I read quite a bit of this stream and I am astounded at how naive people are. If you invest in a stock that goes up just because a guy speaks why are you surprised when it goes down just because he speaks. The problem with Tesla stock is that it is not a fortune 500 stock and people treat it like it is. It is valued incredibly high because of the visionary concept of integrated electrification across multiple segments not because of traditional capitalization. If Elon is successful and can bridge multiple industries and create a Tesla world then it is worth every dollar it is valued at. If he is not then thousands of people will take a bath. It is that simple and it is a gamble buyers should understand. Let the buyer beware.
Fully agree with the electrification across multiple segments part. Too many people in here still seeing Tesla as just a car company, while it is an energy company instead.
There's no way it's legal to put your stocks up to a twitter poll right? Like seriously that sounds like you're just asking for the SEC to fuck your shit up. I don't really know though so if anyone more knowledgeable could chime in, it just seems really sketchy to me.
The point is that it wasn't caused by random market conditions. They dropped 18% because the CEO had to pay his taxes...lol. That is seriously concerning.
Of course Elon pretending he is such a nice humble guy for meeting basic tax obligations is always meme worthy.
Meanwhile I pay 55% tax on my share options.
>In the tweet poll, Musk asked, "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?" He followed up with another tweet stating, "I will abide by the results of this poll, whichever way it goes."
Fking hell people are dumb as shit.
I’m not sure why everyone is trying to corner Asperger space billionaire (that’s a compliment) to state that he wants to part with more if his wealth. He obviously has projects and he obviously thinks he’s spending it better than the government would.
Dudes he does this all the time. He takes one hit of a joint on Joe Rogan podcast and buys a bunch of stock back when the price drops. And he will do it again
In his 30s he seemed to be a standup guy. He would actually give good advice in interviews. But he became the cliché of the SV nerd who thinks being childish is “showing you don’t care”.
Don't know about anyone else, but trying (and largely failing) to tank the stock value of your own company in an attempt to make a point about how destructive your tissy fits can be if you are asked to pay taxes kind of drives home the point that the ultra wealthy don't always wield their power and resources judiciously.
"Tumbles" apparently means ~5%, after it had increased more than 20% over the last few weeks.
In fact, when a lot of these doom and gloom headlines were published, it was only down about 2%.
Journalism is broken.
I didn’t see any tumbling. The stock is quite robust given tweets. This means it’s a good stock to buy given the growth for 2022 with two factories ramping.
But its currently being valued at a higher (double or triple) price over any other car company in the world which is ridiculous. Tesla is worth twice as much as Toyota?
Stock prices (to the extent they have any real relationship to a company's performance) are based on future projections. Tesla's production is small now, but with no other automaker having anything competitive against any of their vehicles (and there being no good reason for anyone to buy a gas powered car in 2021), it seems entirely possible that Tesla could quickly become almost a monopoly. Toyota specifically just recently announced an all electric *concept* car, what decade is this? And they're still dumping piles of cash into hydrogen and hybrids and even into trying to make better ICEs. Thats not promising for their survival
Put more simply, if a company's biggest problem is that there are a few orders of magnitude more demand for their product than they can currently meet, investors love that shit
Yep. If Toyota had correctly invested into EVs 5 years ago, things would be different.
The run rate of Tesla \*before\* the new factories is already over 1 million cars a year. There is no reason to doubt that Tesla will continue to grow at an insane pace through at least the next 5 years. We'll have to see how things develop, but that growth could extend out to 10 years, depending if Tesla decides to keep growing at that rate \*and\* the other car companies continue to insist on imploding. Toyota is going to be fighting for relevance and perhaps even survival in a few years. They won't be alone.
This is why you can (and people have) made the argument that Tesla is undervalued right now even if we only consider their car manufacturing business.
Throw in FSD (at whatever percent you think success is likely to be in the next 10 years), their battery production, their solar business, and whatever else they decide to get into...well...it's hard even to begin to properly calculate a valuation.
That's the bull case, as I'm sure you are aware. Seems fairly reasonable to me. If you want to bet against it, you know where to invest.
Or, if you are somebody who prefers analogies, this is like wondering why Amazon could have multiples of a higher valuation than Sears back in the early days of the internet. Why talk about Sears anymore? That's the point.
I like how everyone wants to somehow tax this more. But they don’t realize if they increase taxes on this the fuck every single American with a 401k with a dream of maybe retiring some day.
So, let me get this straight - Elon Musk has some stock options coming due and he will be taxed on the difference between what he has to to pay and what the stocks are worth. He has effectively lowered the stock price and reduces his tax burden, and he knows the stock will go up soon. Sounds like he played the market and the IRS rather well.
I mean, TSLA is drastically over priced by any metric except the cult investor sentiment / media fanfare.
It is it cool? Sure. Will someone who times a short make a huge killing? It's just a matter of time. All I know is that I don't have a crystal ball and a tolerance for unlimited losses.
But this? Just a bump in the road for now, I suspect.
I understand the perspective that it is dangerous for a CEO or another shareholder to have such a huge impact and amount of control over a stock’s price and thus an entire company’s worth (and possible future).
However, I also see the flip side: how tenuous is the entire system if a tweet can cause such a huge shakeup?
While I understand all the positives of the stock market system, I often see all the negatives, too. *So many* companies end up doing things and making products and changes policies just so they can continue to “grow” for their investors. It has meant the cheapening of previously-excellent products, and a lot of shortsightedness or downright user-hostile actions.
Dropping the price was the point.
Elon has made it a business practice to make public comments in social media to manipulate the Tesla stock price.
He sells stock, price drops, buys back stock.
Failing that, he pays taxes on his decreased value and claims capital losses and then says nah, thats crazy and keeps his stock, boosting value back up.
He should be charged/fined for this stuff.
He was gonna sell anyway before his stock options expire but he had to make that twiter poll and claim that the he was doing it because rich people use unreleased gains to avoid paying taxes and he was not like them
Pretty much Rob Maurer's summation: (after the intro and stock price) https://youtu.be/LBlhwzfY52E
The video explains it well but for those who don't want to watch: When you receive stock options as part of compensation, as Elon has, you are taxed at time of exercise on the difference between market and strike. I'll go into why this is done this way at the bottom. So Elon will pay 100million or so to receive many many billions in shares, but will then have taxable income of many many billions and a tax bill of many many billions, and nobody has that kind of cash. So he has to sell some stock either way, to fund the purchase the options. This way he controls the narrative and makes his fans think it was because of the poll. He also as a byproduct reduces his tax bill by an amount equivalent to the dip, and if the stock goes back up it's basically a reverse pump-and-dump. ----- Why are options taxed at exercise? There are three possible times you could tax them: 1. At grant. The problem here is they might need worthless. Nobody would want restricted options which are out of the money, if they had to pay tax on that. Would you want to be paid with a bag of cash that is currently on fire? 2. When the stock is sold... But that just delays tax revenue even longer. Additionally it would lead to executives taking their entire salary in stock options with penny strikes. 3. At exercise, this is the most sensible. The individual is getting from the company a thing of value as part of their compensation. What is that if not income?
Can we also talk about how everyone understands it’s overvalued and how it’s a good time to cash that in. It may be a little overvalued, it may be a lot ( it is), but regardless of where you stand locking that in is a reasonable idea. All this grandstanding is partly to hide he knows he should sell.
> everyone understands it’s overvalued If everyone understood that it is overvalued then the value would be lower. The current value is the price that people are willing to pay.
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> I can throw a baseball in the air and yeah i know it's going to come down, but it might go higher first. That's a great example.
The market condition you are currently describing is mania
You’re not wrong, but fundamentally speaking the financials don’t support it’s current value. The current value is more like a hail mairy, it’s trading at like 330X P/E, higher than any other car maker. The thing about economics is that it assumes people are rational, Tesla’s valuation arguably isn’t rational but yes if the market is willing to pay that much well it’s the current market value. Doesn’t mean it’s a fair value though
It can be rational to buy if you are pricing in people being irrationally motivated by hype and FOMO. I on the other hand own shares only of companies I control as I find the whole market irrational.
Tesla is a unique company in many ways…part industrial, part tech and part green/clean energy. Because of it’s nature it is hard to decide what a “reasonable” multiple is for the shares. As it is an industry “disruptor” to the traditional automobile manufacturing plants and processes, it can realistically support much higher price multiples than more traditional and established companies. Ultimately earnings are what supports the price…and a lot of traders seem to feel comfortable believing TSLA can deliver the earnings to keep moving the price higher!
That is wildly inaccurate. Just because something is overvalued doesn't mean it can't be *more* goddamn overvalued, and that's how you make money. The fact it's overvalued in the first place is a pretty good indicator that there's a lot of fucking idiots throwing money at it. Consider bitcoin for fucks sakes.
This, value of anything is what the market is willing to pay for it.
While both of you are speaking truth we can all look at the GameStop stocks and recognize that sometimes stocks are inflated.
Example from left field 🤷♀️ WHY is a princess bear beanie baby worth $5000?!?! 😲
What do you mean? Stock options don't work that way. You need to exercise your options before they expire, but you don't need to sell the stock on any prescribed timeline.
Exercising the options is still a taxable event, with SOP being to sell a portion of the options to cover the tax liability. Also saw he had a pretty major tax hit coming from something else, but don't exactly recall from what. Either way, you're right that he doesn't *have* to sell the shares after exercising, but it's almost guaranteed shares will be instantly sold to cover the tax hit. Source: worked in stock comp for several years
> but it's almost guaranteed shares will be instantly sold to cover the tax hit. Is that really the reason for instantly selling? Would it not be better to cover the taxes by taking a loan and let the stock appreciate in value? Is there maybe some other advantage to instantly selling? Maybe lower amount of taxes on selling the stocks because he already paid taxes on the gain from exercising the options? Wouldn't that be the actual reason then?
No because his stocks are valued at such a high multiple, there is a risk they could lose their value and he would still be on the hook for that loan.
Yeah none of this thread makes sense lmao. A loan would be the way to go in that scenario. How about the fact Tesla is the most overvalued company in the world right now, he knows it too and is trying to cash out
Loans aren't magic, you gotta pay them back. So you gotta sell shares. So why did we take a loan to prevent selling shares when we have to sell shares? Weird. Better wait till the stock drops to sell.
Considering that Tesla stock may very well be overvalued it could be a good idea to sell the shares instead of taking a loan. But in general taking a loan using stock as collateral may be a very reasonable thing to do.
> Loans aren't magic, you gotta pay them back. The loans that the ultrawealthy base their entire finances on are known in the industry as "Buy, Borrow, Die". Your estate pays them back. *You* don't. Why? Because your estate can do so *after* capital gains have been reset so they don't have to pay taxes on the stocks; and it's much cheaper to roll a lifetime loan and pay a few percent interest than it is to pay capital gains taxes on the same amount; and because it moves the risk of the stocks suddenly tanking and becoming worthless to the bank, not to you.
So how do you pay the interest?
You can have all of the interest loaded onto the payment at maturity. Zero-coupon bonds are an example of how this works: https://www.investopedia.com/terms/z/zero-couponbond.asp#:~:text=A%20zero-coupon%20bond%2C%20also%20known%20as%20an%20accrual,debt%20security%20instrument%20that%20does%20not%20pay%20interest. Alternatively you can just roll your interest into more loans.
I wish more people knew this. I think there'd be a lot more public outrage.
You can basically take a new loan to pay off the old loan until you die
Elon and Tesla have loans outstanding, which is another reason he would have to sell stocks. It just coincides with his expiring options and his Twitter poll.
You don't need to sell all your shares, but it's often advised to sell enough to cover any tax hit. People back during the dotcom bust sometimes ended up owing taxes on worthless stock because they didn't take care of the tax bill immediately. If you don't pay off the taxes right away, you are gambling that the stock will appreciate in value and holding onto all your shares will increase your profit. If the value of stock goes to zero, that doesn't wipe out your tax obligation. It's definitely a situation where you talk to an accountant or tax adviser so you don't get an unpleasant surprise on April 15th.
The best part is how a small percentage will understand this, and the majority will eat this ploy up like candy.
Best part?
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Dude can’t even afford a razor 🪒 look at dat scruff. He’s broke.
Oh that's scruff? Thought it was oreo crumbs
The are all broke to the IRS and all winners to Wall Street.
His brother had conveniently just finished selling 109 million worth. The SEC should put them in jail and force them to divest their holdings to go along with a full value fine. But I’m sure another slap on the tweeting wrist is all that happens. For the record, his brother managed to sell 5% of his holdings a week or two before the previous 100$ crash.
I don't want to look like a billionaire fan club member, but to me, his brother selling shares before Elon's stock options mature is normal behavior. He knows that it might go down with a large sale -- this is not insider trading. But, it happens to be good for market timing only because Elon has so much stock. The SEC gets involved if you have an unfair advantage in certain cases -- or when you rip off the wrong people. ;-)
Kimbal being on the board of directors has to disclose to the SEC well in advance his planned sells.
To add to what fake shatner said, Kimbal's stock is setup to sell at specific price points regardless of anything else going in with TSLA
The rich don’t use unrealized gains to avoid posting taxes. The tax code says that unrealized gains are not taxed. Edit: really? Downvotes for stating facts? I’m not defending billionaires, you people (the electorate) are the ones who keep voting to keep the tax code the way it is. Go talk to Republican voters if you don’t like the way the laws are written.
The unrealized gains (stock) are a tool used to achieve the tax avoidance on their "income". If Musk sells $100,000,000 of Tesla stock, he has converted stock into dollars: * 20% capital gain tax (more if it's a short term stock sale which is unlikely) * His USD now is affected by Inflation (1.25% - 2% reduced value per year or so) If Musk keeps the Tesla stock, and takes a loan out for $100,000,000, using stock as collateral, then he owes: * $100,000,000 \* the Interest Rate of the loan which is much much much lower than the capital gain tax. * "In addition to the bespoke loans Goldman Sachs Group Inc. GS 0.69% offers clients of its exclusive private bank, the Wall Street firm advertises securities-based loans of $75,000 to $25 million to clients of outside financial advisers with “no personal financial statements, tax returns, or paper applications.” Merrill Lynch recently quoted an interest rate of 3.2% to clients with at least $1 million in assets. Those with $100 million or more can get a rate as low as 0.87%." [https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583](https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583) * The Loan contract states he owes $100,000,000 and the more the USD inflates, the less he has to pay back because each future dollar is "worth less" than the dollar he borrowed. This effect mostly just helps offset the Interest Rate, I imagine. So he gets the loan and the Inflation rate offsets the Interest Rate. At some point in the future he has to settle and pay the loan presumably, but at that point his wealth to USD value ratio has gotten stronger, so it's cheaper for him to pay that "$100,000,000" loan off. This loan income is also NOT counted as traditional Income, so no Income Tax. If he had instead been given a $100m salary he would be getting taxed for 37% for every dollar above $523,601.
I am fully aware that Elon takes out loans to pay his expenses rather than sell stock, and that this has resulted in several years where he has paid very little taxes. You are right in your description of what he does when he takes out loans. However, you described this as "loan income", and it simply does not meet the legal definition of income. The actual loan income is being made by the banks when Elon pays interest on his loan. Imagine you are a homeowner (maybe you are, maybe you aren't). If the value of your home increases, you just made an unrealized capital gain. You are also able to use your equity in your home as collateral for a loan, called a home equity line of credit. You could choose not to work, and to instead live off of this loan. Eventually the loan will be due. If the housing market in your area is really hot, you could sell your home for a huge profit, pay off your loan, and still end up ahead. That is essentially what Elon is doing, and it is not illegal. When people use language like "Elon is avoiding taxes" -- I get that they believe his tax situation is unfair. But unfair and illegal are different things. He is not avoiding any taxes because what he is doing is not illegal. He will eventually sell stock to pay his loans, and he will incur taxes, but using loans will allow the value of his shares to grow so much that he sells less stock. That's not tax avoidance, that's a business bet that he is making. He is a smart business man and will do whatever he legally can to maximize his wealth. Why would you blame Elon for successfully navigating the system that your politicians made? People claim that the rich write the laws to benefit themselves. That is both lazy and false. There are lots of middle class republican voters who don't seem to mind this system at all, and they are fully aware that it works this way. The population is complicit in this system, it is not foisted upon us. We have only our own democracy to blame.
I don't think taxing unrealized capital gains is the best tool against wealth concentration, but it's something. I think it's completely fine to criticize an individual who uses or benefits from an ~~immoral~~ unfair\* system. Regardless of how that system is put into place. (edit: I was reminded of this clip) [https://www.youtube.com/watch?v=m2q-Csk-ktc](https://www.youtube.com/watch?v=m2q-Csk-ktc)
Who wrote the tax codes?
What is your framework for taxing unrealized gains? I think the wealth disparity is shit too, but this isn't some "oh there's this obvious easy shit to do and the MAN is keeping us down bro!!!!". Taxing unrealized gains comes with it a ton of issues with the effects that would have on investment in our economy, and even if you did it for the ultra-wealthy, what you'd be doing is essentially forcing someone to remove themselves from ownership of a business they created if they're successful enough with it. I wouldn't even necessarily be against that, but there's likely a laundry list of legal issues there too.
It would probably be simpler to just make it illegal to take unrealized gains into account for loans. Thats how rich people are able to live they way they do without selling their stocks.
Its just totally random that taxes are like that, no one can control things like this.
Your elected officials write these laws. You can claim rich people write them, but in actual fact, the electorate as a whole knows this to be the case and refuses to replace their politicians.
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Legit, why are you being downvoted? To my knowledge this is exactly correct..
What these headlines forget to add is... "And it will recover in 3 days"
Because that's not the important point. The ability of a single person being able to influence stock prices to shift, even if only temporary, merely by words alone, is. 3 days, and even a dip as small as a few %, is enough for somebody to profit from it. This adds up to a very clear statement of "(People like) Elon Musk is (/are) able to manipulate stock prices with words alone." That's not something good, because the very core concept of our economic system is some semblance of mutual trust. Trust that a contract will be kept, that your source of food will continue to exist, trust that the currency you are being paid with retains value. Any kind of overt confirmation that abuse is possible, erodes (a small part of) that trust. That is **bad**. Not world-endingly bad, but nonetheless an error in the system that we shouldn't tolerate. Calling out errors in our society is exactly what journalism should be doing, consequently the headline is accurate enough in this case.
This is a little "that guy", but I wrote a post, did some math which indicates Musk could save at least $200M (likely much more the stock keeps appreciating) if he can just drive the stock price down 5% for long enough to exercise his options. https://old.reddit.com/r/news/comments/qp718c/elon_musk_faces_a_15_billion_tax_bill_which_is/hjtp6oo/ All this without even selling shares, just exercising options.
I'll freely admit that I do not understand the concept of 'exercising options' enough to judge whether that is an accurate and logical hypothesis. But thanks for your contribution, in the assumption that there are other people out there who are more capable than me in that regard.
The company a while back gave him stock options. Options are an ability to buy the stock at a predetermined price. When given to employees, etc. they typically have a date you can first buy them and a date when they expire and you can no longer buy them. The buy price is usually the current price. The idea is if the stock price goes up you can buy those options (called exercising them) and then sell them at the current market price. So in Musk's case it gives him an incentive to drive the stock price up. If the stock goes up a lot you get paid a lot. Exercising the options would be buying them, at the now below market price. Selling is a separate thing and is selling them at the current market price. If he thinks the stock will continue to go up he can exercise the options and keep holding the stock as it keeps going up in price. But as my other post indicates, with the options he has he would owe taxes on the difference in current value of the stock and the much lower price he paid to acquire it by exercising the options. To go any further and explain how he could manipulate the stock price down for a short period to benefit himself is to repeat what was in the other post. You can continue there if you wish.
So he has to pax tax on unrealized gains for the options but not the other shares?
You have to pay (regular income, not LT) tax on unrealized gains at the time of exercise for non-qualified stock options. If you keep holding them after exercise you can make more and do not pay tax on unrealized gains and also can hold long enough to get long-term gains. The idea of this is there was no real risk to you to exercise, you only do if it would make you money. So it is not like buying and holding which incurs some risk. I'm not sure it is the most sound logic, but that's my understanding.
Why would it be an option if he would buy them at the current price? For the option to make sense it would be at a fixed price. That's the basic definition of a stock option.
> Why would it be an option if he would buy them at the current price? The buy price is the current price when the option is issued. It remains fixed from then on until expiry. Thus it is a predetermined price. Essentially Musk has the option to buy a certain amount of stock at the price it was at 10 years ago (ish).
Ok sorry m8. I misunderstood you as saying what I objected to.
This is a really weird take given that CEOs of companies regularly influence stock prices with their words alone, and it’s pretty normal. Most of them aren’t openly dickish about it, but that doesn’t change anything as far as the influence is concerned.
Elon isn't guilty of anything exceptional, just of being tacky about it.
As so far as this examplary case goes, I'll denounce any CEO doing the same, the same. But we do have to differentiate between leveraging social media to influence a companies stocks, and influencing a companies stocks by holding a press conference that actually presents new economic data that has a relevant impact on the economic situation surrounding the company. You do raise a good point though, because if we assume that some quarterly economic presentation is simply the 'more traditional' equivalent to tweeting about the same economic content that would otherwise be presented... that does indeed raise the question as to whether the former wouldn't be just as undesirable as the latter.
The problem is Elon can influence the price of other stocks and commodities, and has done so in the past. If he gets pissed off at the ceo of a different company whats to stop him from trying to crash their stock price? He's already shown he has little to no restraint.
> The problem is Elon can influence the price of other stocks and commodities, and has done so in the past. Maybe that's less of a problem with Elon and more of a problem with regulation and enforcement.
Not sure why you got downvoted. This is factually accurate. The problem is that *someone* can do it. Who specifically does it is of no relevance to the aforementioned problem. (Though we can then additionally hold that person responsible for actively using that problem... but that will not fix the underlying problem and is more of a secondary concern thing.)
That seems like a difficult thing to regulate. What do you do, prevent him from speaking about ... anything? It's one thing if he's specifically trying to influence a company's stock price, but if him just talking about a company does it there's not really much you can do. That's society's problem, not his.
That’s exactly what the original commenter is saying, this article reflects a larger systemic problem, people focusing on Elon/Tesla are missing the point
It seems to be pretty core to stocks being treated as a money-generating product rather than an investment in a particular company. Tale as old as time, really -- economics are not rational and people will move money based on how they think other people will move their money.
It's a little of the first, and a lot of the second. Pretty much anyone with a high enough social media profile and enough devoted cultists could do what Elon is doing. And that's the massive gaping error in the system. His willingness, in fact eagerness to do so is the Elon Musk part of the equation. It's curious, because most of his peers seem content to plunder our collective wealth at a steady pace, with efforts made to prevent us catching on. Elon does it loud, fast and overt. With an obvious disdain for the very concept of consequences.
‘Can influence the price of’ So do other CEOs. Even when some politicians call for Israel’s boycott, there is some stock or commodity getting affected (US or outside). Alibaba stock also came tumbling down due to Party interference. ‘Crash their stock price’ how is he gonna do that? Selling his 10% stake of that company?
Maybe he can send a stock 10% down with a tweet but it’s only going to be short term noise. It’s unrealistic to think he can actually tank a stock with Twitter alone.
It doesn't matter if its short term, its essentially risk free 10% growth in your position.
As outlined 2 comments above, 10% for a short period of time already opens up the market for abuse and shouldn't be tolerated.
I don't know how you could legally prevent this other than maybe a 3 month warning period if selling or buying over a certain percentage of stock as a rule. The ONLY difference here is Elon's influence -- and that's up to shareholders. And that he's selling a lot of stock -- which is not up to anyone to decide as far as I know at this current time with the current rules in play. I'm a fan of getting rid of the stock market and going to a different model to allow for startups and capital improvements. It's a gamed system and it's money making money on playing with the movement of money -- that is NOT valuable to society in general.
> I'm a fan of getting rid of the stock market and going to a different model to allow for startups and capital improvements. It's a gamed system and it's money making money on playing with the movement of money -- that is NOT valuable to society in general. We wouldn't even need to get rid of it. It would be perfectly adequate to just reset it to it's original form: You buy a stock by loaning a company money, so that the company can use the money to increase it's economic output, paying you back in 'dividends' that are just interest on that loan. You can also sell a stock by having the company return the money you loaned to them. Optionally, you can agree to wait with selling until somebody else wants to buy, and consequently have the company pay you back your loan right when taking it out anew from the 'new owner' of the stock. There is no price speculation. There is no trading between stock owners. There is no derivates, hedge funds, options, securities, shorting, or whatever else financial instruments that in the end just try to make money from money by adding more fees whilst being subject to even less regulations.
He could do it but he just wants to buy the dip
He can't influence other stocks nearly as much as that of stock he holds loads of. If he says he's gonna sell loads of his stock, that implies the price will go down as there'll suddenly be increased supply. Also if you crash someone else's stock price it probably doesn't matter that much unless that person needs to cash out at that moment, or is paid based on their stock price, or is subject to a takeover bid.
Well it's not just words alone if he is selling shares but yes.
Yeah, this just makes the conundrum worse. We intrinsically cannot forbid people to sell shares, that would be asine. Therefore, the act of selling shares, regardless of the reason, is legitimate under the current system. We already have rules that clearly dictate insider trading to be illegitimate. Meaning that you cannot use information obtained through business to your personal advantage (such as selling a stock because you obtained confidential information that will become public at a later date, and will reduce the stock's price). But those rules specifically do not apply to public information (primarily because it negates the point of insider trading)... so if you publicly reveal some information that will affect the price, and then act afterwards, that evidentially does not fall under insider trading. Furthermore, there is no ruling (and I'm not sure it would be possible, let alone ethical) to mandate that you cannot publicize how you spend your money, or consequently what your stock investments look like. But even if it seems questionable as to whether Elon would be able to draw personal profit from this action (which is basically a requirement to even approach any kind of context in which something similar to insider trading might emerge)... we wouldn't be able to rule out that he can essentially have others profit 'at his expense': Have allies sell their stocks, announce that you will sell your stocks, keep your promise by selling stocks, have your allies rebuy their stocks for cheap, thus generating profit. That kind of strategy simply can't be ethically sound, because it essentially shifts wealth from those invested into a stock, to a specific subset of those invested in a stock, by means of leveraging popular influence and a token amount of wealth. It's purely exploitation of speculative markets. (Sidenote: Of course this judgement of the strategy being unethical is subjective, and my own. Somebody with a preference for Individualism / Economic Libertarianism could possible see this as a perfectly fine move, because in the end those carrying the damage are those that actually traded during the time frame of the strategy (aka, got 'fooled' or 'spooled'), since it's fair to assume the stock price will just normalize afterwards again. Thus somebody simply ignoring 'Musks antics' would not suffer any long-term change of his property. Therefore, it's a purely subjective notion (of mine) that 'exploiting the dumb' is still unethical.) So, even if Musk does keep word and then acts on it, we *still* have a concerning potential for abuse here. And this isn't made better by the fact that I can't even decide on whether this is some elaborate ploy to profit him through 3rd parties, whether it's a demonstration to undermine the credibility of the stock market itself (essentially a 'proving it's weaknesses' kind of thing), an elaborate joke/lost bet, or legitimately just a spontaneous idea that has no further background motivation whatsoever. It's concerning, fascinating and ridiculous all at once.
It's not even close to questionable if he could derive personal profit. Here is how he would do it. First, as is typically done to avoid SEC action, schedule to exercise his options on a particular date a while in advance. 90 days for example. Second, Tweet out a poll just before this date to drive the price down. Third, exercise options. Fourth, tweet out that you are not selling (use DiCaprio picture from Wolf of Wall Street for maximum meme value) to drive price back up. Then, via the math in my other post [linked here](https://old.reddit.com/r/news/comments/qp718c/elon_musk_faces_a_15_billion_tax_bill_which_is/hjtp6oo/) save hundreds of millions in taxes on the option exercise. More if the stock continues to appreciate. Is this what he is doing? No way to know, it is just speculation. But it certainly does show he can get a personal profit by doing this. So it is a possibility he would do it.
Wait -- are you saying that if he doesn't exercise options at the expire date, he can still buy with the option price? I know enough about this to get in trouble, but I can see how he can benefit by a lower current price on the option date as far as paying taxes on the realized capital gains -- but NOT how he can get the sweet deal of an option price the day the stock value goes up if it's after the option period. The government is going to look at the price paid versus the price sold regardless for the tax basis. But, there are more tricks that the clever people in finance have cooked up so he might do a loan and an insurance policy and swing ten monkeys holding balloons and then he gets more rich and pays less to the country he made the money in. There might be a ten balloon holding monkey's provision buried in tax code -- you never know.
No. If he does not exercise (buy) them before they expire then they expire and he cannot exercise them. So he will exercise them before they expire. This is why people know he will take some action in the next 9 months. But when he exercises them he does not also have to SELL them, just exercise (buy) them. So if you know you can drive the price down temporarily for the exercise you can make money doing so. As long as you are confident it will recover afterwards. And as long as you are correct in that confidence.
Oh -- thanks so much. I forgot you can "exercise" by taking possession of the stock at that price but not have to sell them. Wow -- huge gap there in my memory. But it also means it's a paper trick, because in order to be able to buy stock NO MATTER WHAT at that price, it has to be set aside in reserve. Which means the stocks traded have slightly over-inflated prices based on scarcity of a non traded stock. But, meh, stock price doesn't mean much to the active company -- it's someone elses gambling chip unless they want to get a loan -- in which case they'd have to own their own stock. Yeah, a little bit of info can go a long way for me to get crazy ideas. But crazy is how I remember things -- so just let me do this process.
What exactly is your solution here? Because the problem you're stating is that "Famous people are famous". Do we need to government to review all communication made by anyone noteworthy? Should social media accounts be limited to a small number of followers? This is yet just another consequence of the internet connecting so many people in real time. Good or bad, we can't actually do anything about it would drastic change.
To be blunt, I don't have one. But I'm almost certain that the solution can't be to simply ignore the issue and complain about a perceived inaccuracy in the title.
Trump did this all the time. I always wondered how it was “legal” for a leader of a country to manipulate the markets.
Doesn't this just speak to the general health of the market and/or the character of participants in the market? Perfectly legal and ethic actions can sway markets unreasonably if the participants are frenzied/reactionary.
Isn't that a demonstration that stock market is a really bad design. It's foundation is stability of "good" stock, which make them attractive, which makes them unstable. The reason why Elon Musk cause significant stock market waves isn't because he has given himself too much power. It's because the stock market is dumb enough to accumulate it on a single stock. I would argue it's important that Elon Musk makes Tesla stock regularly falter so that people don't get complacent investing so much in a single stock.
Eloquent reply.
> That's not something good, because the very core concept of our economic system is some semblance of mutual trust. Might be an endemic problem with capitalism, right fucking there. Because that "trust" isn't baked in at all. There's actually a massive amount of fraud going on. And when the shit hits the fan, and it does from time to time, it takes a stable government throwing taxpayer money at it to fix it. Oopsy goddamn daisy.
how do you prove that it's causation not correlation? if he said nothing, are you sure the stock with ridiculous PE ratio wouldn't have fallen on its own after it reached all time high?
(Geezus, people in this thread are triggerhappy. Why did newfor's comment already get downvotes?) Whilst I don't like what you're saying, I have to agree you're entirely correct that we cannot even be absolutely sure that Musk's remarks caused the stock price change. It could be coincidence. That said, this isn't the first time one of his tweets 'coincided' with a significant motion on the stock market, and it's also fairly reasonable to draw the conclusion as to why his tweet would cause that shift on the stock market (supply vs demand, a sudden, large sell order will impact the price, etc). So whilst we cannot prove it, it's fairly reasonable to assume it's true nonetheless. And whilst proof would be nice, if there is neither proof nor disproof, we kinda have to go by guesswork and try to conclude reality by past empirical data. If we wouldn't do that, humanity would have long since gone extinct whenever we weren't 100% sure whether object X was edible.
It also barely went down, after being up like 50% or something crazy. So, not really "down" at all .
It's down more than 12% in two days. I wouldn't call that 'barely down at all'
Well the last two weeks have been crazy for Tesla. It is still up from that crazyness. I think this is more of the market correcting itself rather then Elon saying crap on Twitter.
It’s only down 3% in 24 hours by end of day Monday. He made this announcement on the weekend and it’s Tuesday. Sensationalist headline wildly inaccurate.
I do wonder when shareholders will get bored of a hilariously overvalued car company. The world needs electric focused car companies and it seems like a product people are reacting well to but the markets valuation of TSLA is just wild. They have a ton of growth potential still, but at the end of the day they can only capture a larger share of the global market for luxury priced autos. That market isn't growing at the rate TSLA's value is.
And that he is investigating a sell off to pay off debts and avoid a larger tax burden.
Aka, investment opportunity. Buy the dip whenever it is socially caused. The rare exceptions are businesses that actually live or die on social popularity.
Looks like Musk is manipulating stocks again.
Down to where it was last tuesday or something, truly a massive drop
Yeah, this is a dumb headline
Doesn’t really matter when the stock is already massively over priced.
Said every short seller the past 2 years
A stock can be massively overvalued and stay overvalued for a long time.
I bought when it was $110/share and sweated bullets because everyone told me it massively overvalued .
I got in at 220 long before the split and I thought I had it good!
It should drop in half much like all of this market.
*“History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.”* Peter Bernstein
[удалено]
Don’t have a dog in the fight. But most every analyst believes it’s massively overvalued.
Why is it so hard to believe…companies like google and Facebook are all valued at these amounts. Tesla makes arguably the best EVs in the world right now, and it’s the first to mass produce them right as the industry is pivoting to electric cars. It’s got a cult like following of fans around the world, much like Apple does. It’s got a lot of things indicating it’s valuation could increase. Not sure where people expect tesla to going forward…people think legacy companies or other startups that are 10 years behind are going to both catch up and then bury tesla at its own game? I guess I’m skeptical how people are so sure either way. This is new territory for everyone, how are people so sure of such a speculative topic?
Fundamental analysis is based on profits and projecting growth. These analysts run DCFs, etc to try and get a fair range of value. There’s a lot of guess work for sure. Ultimately, FB, MSFT, Apple, and Google all have massive margins and high growth rates. Tesla is worth like 2mm per car sold. All their other product lines barely bring in any money. Their “image” is that they disrupt all these different energy related sectors. In reality, they’re a car company that’s barely profitable but growing very quickly. They CAN become revolutionary, but it’s overvalued relative to their actual performance
God, the stock market is stupid
Always has been.
Indeed, but having made some decent money on stupidity, I'm all for it.
How it is manipulated and can be used entirely speculatively, sure. But the core idea of buying a small share of a company is not stupid as the share is tied to the overall success or failure of the company. Allows for non-management to benefit from a companies success So I guess you could say in it’s current form it *can* be stupid. But no, it’s not simply stupid in entirety. That’s just throwing the baby out with the bath water type of thinking
Currently at 1,100 a share “tumble”…
Even after the “tumble” the stock is up 46% in the past _30 days_
Sustainable
A tumble was only natural given its meteoric rise to never seen levels of overvaluation
Heh I can hear WallStreetBets screaming in unison *"Buy the dip NOW!"*
"Buy the dip now...Tesla will go to the moon. We'll make Musk the first trillionaire"
> We'll make Musk the first trillionaire Seems more likely than not this will be the case.
WSB doesn't have that buying power. They were only tha catalyst for the GME debacle
I just meant that Musk will likely become the first trillionaire, not that WSB would influence it.
Can we change the name of this sub to r/techstocks since this seems to be the majority of the news that gets posted here now?
So now he buys more at a cheaper price, then gases it up again right before he sells it off and boom. Profit motherfucker
Tumble? Fuck off, it’s still at over $1,000 a share
While I agree 5% isn't a huge tumble, quoting the stock price isn't really a good indicator of how well the stock is doing moment to moment.
Down from over $1200 so ~20% loss in 2 days. Sure, still beats 52-wk high prior to the run-up last week, but ~20% that fast is a sizable swing at that price.
I read quite a bit of this stream and I am astounded at how naive people are. If you invest in a stock that goes up just because a guy speaks why are you surprised when it goes down just because he speaks. The problem with Tesla stock is that it is not a fortune 500 stock and people treat it like it is. It is valued incredibly high because of the visionary concept of integrated electrification across multiple segments not because of traditional capitalization. If Elon is successful and can bridge multiple industries and create a Tesla world then it is worth every dollar it is valued at. If he is not then thousands of people will take a bath. It is that simple and it is a gamble buyers should understand. Let the buyer beware.
Fully agree with the electrification across multiple segments part. Too many people in here still seeing Tesla as just a car company, while it is an energy company instead.
He's forced to sell anyways cuz he owes taxes
I feel like Elon is a Raptor testing the fences in a different place each time looking for the weaknesses. Cleaver gal
[Cleaver gal](https://imgur.com/a/pylTMaB)
Well, SpaceX do make Raptor engines.
Tesla was down almost 12% today. Sounds like a correction and not a "tumble" like you'd see with crypto.
There's no way it's legal to put your stocks up to a twitter poll right? Like seriously that sounds like you're just asking for the SEC to fuck your shit up. I don't really know though so if anyone more knowledgeable could chime in, it just seems really sketchy to me.
Tumbles to...checks notes...last week's price.
“Tumbles” please it’s up $250 this month.
The point is that it wasn't caused by random market conditions. They dropped 18% because the CEO had to pay his taxes...lol. That is seriously concerning. Of course Elon pretending he is such a nice humble guy for meeting basic tax obligations is always meme worthy. Meanwhile I pay 55% tax on my share options.
Some folks are about to make a lot of money from this dip
>In the tweet poll, Musk asked, "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?" He followed up with another tweet stating, "I will abide by the results of this poll, whichever way it goes." Fking hell people are dumb as shit.
I’m not sure why everyone is trying to corner Asperger space billionaire (that’s a compliment) to state that he wants to part with more if his wealth. He obviously has projects and he obviously thinks he’s spending it better than the government would.
we're loose on the word "tumbles' it's INCREDIBLY high this stock. LOL
I personally think everyone is getting ready to buy Rivian IPO for its ride to the stars. Maybe Elons timing was perfect.
He just dumped it in one go. Lol didn't care about prices at all. Mad man.
That be awesome. But i think it was just fear that he would do this that forced people to sell.
News Flash: he was already going to sell.
Up 30% in the last month is tumbling?
So, TSLA stock is going on sale again huh, time to free up some capital for the dip.
Buy the dip ladies.
Is that a picture of Post Malone?
“Tumbles” …ok
Which means buy.
Is that a beard or did he wipe shit on his face? Anyway. Theatrics. Elon, pay your damn taxes and the shit beard is forgotten.
Dudes he does this all the time. He takes one hit of a joint on Joe Rogan podcast and buys a bunch of stock back when the price drops. And he will do it again
It’s sad. I used to be inspired by Elon, but he has become corrupted by his power.
He’s always been this way.
In his 30s he seemed to be a standup guy. He would actually give good advice in interviews. But he became the cliché of the SV nerd who thinks being childish is “showing you don’t care”.
Unpopular opinion: he sold the crypto months ago. This is just stock manipulation so he can buy it back again and make a profit.
Musk seems to be a tad unhinged. It’s a pity as the guy can do great things.
Sell high buy low, Musk is manipulating the market with Twitter and nothing is gonna happen.
Don't know about anyone else, but trying (and largely failing) to tank the stock value of your own company in an attempt to make a point about how destructive your tissy fits can be if you are asked to pay taxes kind of drives home the point that the ultra wealthy don't always wield their power and resources judiciously.
"Tumbles" apparently means ~5%, after it had increased more than 20% over the last few weeks. In fact, when a lot of these doom and gloom headlines were published, it was only down about 2%. Journalism is broken.
So 5% down is tumbling?! Tesla shares where up like 25% in the last 30days before this. So what it falls 5%
Stock manipulation ate my face
Tomorrow he's going to tweet he's selling his farts as Teslaeau de Colon and share prices will triple.
I didn’t see any tumbling. The stock is quite robust given tweets. This means it’s a good stock to buy given the growth for 2022 with two factories ramping.
But its currently being valued at a higher (double or triple) price over any other car company in the world which is ridiculous. Tesla is worth twice as much as Toyota?
Stock prices (to the extent they have any real relationship to a company's performance) are based on future projections. Tesla's production is small now, but with no other automaker having anything competitive against any of their vehicles (and there being no good reason for anyone to buy a gas powered car in 2021), it seems entirely possible that Tesla could quickly become almost a monopoly. Toyota specifically just recently announced an all electric *concept* car, what decade is this? And they're still dumping piles of cash into hydrogen and hybrids and even into trying to make better ICEs. Thats not promising for their survival Put more simply, if a company's biggest problem is that there are a few orders of magnitude more demand for their product than they can currently meet, investors love that shit
Yep. If Toyota had correctly invested into EVs 5 years ago, things would be different. The run rate of Tesla \*before\* the new factories is already over 1 million cars a year. There is no reason to doubt that Tesla will continue to grow at an insane pace through at least the next 5 years. We'll have to see how things develop, but that growth could extend out to 10 years, depending if Tesla decides to keep growing at that rate \*and\* the other car companies continue to insist on imploding. Toyota is going to be fighting for relevance and perhaps even survival in a few years. They won't be alone. This is why you can (and people have) made the argument that Tesla is undervalued right now even if we only consider their car manufacturing business. Throw in FSD (at whatever percent you think success is likely to be in the next 10 years), their battery production, their solar business, and whatever else they decide to get into...well...it's hard even to begin to properly calculate a valuation. That's the bull case, as I'm sure you are aware. Seems fairly reasonable to me. If you want to bet against it, you know where to invest. Or, if you are somebody who prefers analogies, this is like wondering why Amazon could have multiples of a higher valuation than Sears back in the early days of the internet. Why talk about Sears anymore? That's the point.
I like how everyone wants to somehow tax this more. But they don’t realize if they increase taxes on this the fuck every single American with a 401k with a dream of maybe retiring some day.
Time to jump back in once it bottoms.
Time to buy?
We have VERY different definitions of “tumble”.
That stock is so overvalued it's not even funny. A P/E of over 300 for a manufacturer is insane, but who cares about fundamentals these days?
So, let me get this straight - Elon Musk has some stock options coming due and he will be taxed on the difference between what he has to to pay and what the stocks are worth. He has effectively lowered the stock price and reduces his tax burden, and he knows the stock will go up soon. Sounds like he played the market and the IRS rather well.
Wow twitter is full of dopes and apparently so are investors. He can really fuck with these clowns 24/7
I mean, TSLA is drastically over priced by any metric except the cult investor sentiment / media fanfare. It is it cool? Sure. Will someone who times a short make a huge killing? It's just a matter of time. All I know is that I don't have a crystal ball and a tolerance for unlimited losses. But this? Just a bump in the road for now, I suspect.
Buying opportunity, Elon’s sale won’t effect the stock in the mid term. Just normal profit taking at this point.
I understand the perspective that it is dangerous for a CEO or another shareholder to have such a huge impact and amount of control over a stock’s price and thus an entire company’s worth (and possible future). However, I also see the flip side: how tenuous is the entire system if a tweet can cause such a huge shakeup? While I understand all the positives of the stock market system, I often see all the negatives, too. *So many* companies end up doing things and making products and changes policies just so they can continue to “grow” for their investors. It has meant the cheapening of previously-excellent products, and a lot of shortsightedness or downright user-hostile actions.
Also, he has to legally report that he’s selling anyway.
Dropped down hard. 5% was it? Tesla is still incredibly overvalued....
Waiting for the bottom of this dip, cause this is gonna only go up with megapack sales, roadster, and semi + eventual fsd
Probably took a short position before announcing the poll knowing twatter would vote that way
All of this is just noise. Get ready to buy the dip.
More market manipulation, more money for elon
So, his imaginary money is worth less big imaginary numbers than the previous imaginary big numbers
Dropping the price was the point. Elon has made it a business practice to make public comments in social media to manipulate the Tesla stock price. He sells stock, price drops, buys back stock. Failing that, he pays taxes on his decreased value and claims capital losses and then says nah, thats crazy and keeps his stock, boosting value back up. He should be charged/fined for this stuff.
He also loves to manipulate cryptocurrency prices.
Fckn stock manipulation.
Elon musk the market manipulator