Why Tesla Stock Fell on Monday

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© Provided by The Motley Fool Why Tesla Stock Fell on Monday

What happened

Shares of Tesla (NASDAQ: TSLA) dipped on Monday, falling as much as 7.3%. As of 10:20 a.m. EST, the stock was down about 3%.

The growth stock‘s decline comes as Tesla CEO Elon Musk proposed selling 10% of his stock. Over the weekend, the billionaire conducted a poll on Twitter, asking whether he should sell some shares and pay taxes on them.

© Getty Images A chart showing a stock price declining.

So what

If Musk follows through with his promise on Twitter to “abide by the results of this poll,” he will indeed be selling 10% of his Tesla stock. Over 3.5 million people voted, with about 58% of votes saying that the CEO should sell 10% of his stock.

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For why he proposed the partial sale, Musk said, “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.” In addition, the CEO notes that since he doesn’t take a cash salary or collect cash bonuses, stock sales are the only way he can pay taxes. 

Now what

While some investors may interpret a move by Musk to sell shares as bearish, those investors may want to reconsider looking at this move with the glass half full (or 90% full, for that matter). Selling 10% of his shares means Musk would hold onto a whopping 90% of his massive stake in the company. The CEO currently owns more than 20% of Tesla, with the stake valued at well over $300 billion. Maintaining 90% of his holdings in Tesla would mean the billionaire’s skin is in the game.

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Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Tesla and Twitter. The Motley Fool has a disclosure policy.

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