How Elon Musk 'lost' a $20 billion bet
For better or worse, Elon Musk's twitter account never leaves us bored.
Of course, the billionaire's latest bravado may turn out to be much more expensive than anyone would have imagined.
A series of two tweets by Elon Musk, over the weekend, could cost him over $20 billion.
The CEO of Tesla is, today, the richest man in the world. In the Forbes listing, he is currently above Amazon founder Jeff Bezos.
At the same time, Elon Musk is also the most exposed billionaire on TV, internet and social media.
(Image: a still from Elon Musk's participation in an episode of 'Saturday Night Live')
Musk's great exposure led him to post a poll on Twitter in which, within 24 hours, more than 3.5 million tweeters participated.
His poll was a reaction to frequent comments in the American political debate that rich people are not paying enough taxes.
(Image: congresswoman Alexandria Ocasio-Cortez wearing a dress at the MET gala saying 'Tax the Rich')
One of the reasons they pay little in taxes compared to what they are 'worth,' is that many billionaires hold large chunks of their money in stocks rather than, say, a savings account.
The stocks may become more valuable over time, but as long as the owner doesn't sell them, this added value is not considered a profit for them.
And that is why Elon Musk asked the following question to his nearly 63 million followers:
"Much has been made lately of unrealized gains being a means of tax evasion, so I propose selling 10% of my Tesla stock. Do you support this?"
In case there were any doubts about the formality of the survey, the businessman clarified in the following tweet: "I will abide by the results of this poll, whichever way it goes."
Musk's tweets seem to portray a concern with what the public may think of him. He added to his thread of tweets that there was no other way for him to pay taxes - as if he would have gladly done so otherwise.
"Note, I do not take a cash salary or bonus from anywhere," he tweeted. "Thus the only way for me to pay taxes personally is by selling stock."
There was more to Musk's offer than it seemed, though. The Tesla founder was making a bet.
If he sold 10% of his Tesla stock, it would have major consequences for the value of the shares and for everyone owning them. As one follower commented: "This Twitter Poll decides the fate of $20,000,000,000+ of Tesla stock lol."
Musk relied on many people fearing that Tesla shares would crash in case he sold $20 billion of his, and that the stock market would suffer.
The question, therefore, really was: Do you want to miss out on some taxes and keep the stock market from falling, or do you want my taxes at the cost of the stock market's health?
Well, the result was that 57.9% of the votes opted for the sale of the stocks. If he really follows up on his promise, Elon Musk will now have to dispose of 10% of his shares in Tesla.
What does this mean? According to Bloomberg, Elon Musk owned 17% of Tesla's outstanding shares as of June 2021. They are worth $208.37 billion.
If you calculate 10% of the stocks he owns, the amount he committed to on Twitter, that price would reach heights far beyond the 20 billion dollars we initially talked about.
And even if Elon Musk sold all these billions and paid taxes on the money he made with that, he would still be the richest man in the world. His participation in Tesla, as well as in other companies such as Neuralink or SpaceX, have put him at a great distance from other tycoons in today's billionaire circles.
Forbes estimates that the businessman currently has about 318 billion dollars. The money he "bet" and "lost" on Twitter is therefore only small change to him.