Elon Musk’s Twitter Poll Results Favour Tesla Stock Sale
Billionaire CEO pledged to abide by vote’s outcome.
Billionaire CEO pledged to abide by vote’s outcome.
Twitter users said Elon Musk should sell 10% of his Tesla Inc. TSLA -0.64% stock, a stake valued at about US$21 billion, after the chief executive polled them and pledged to abide by the outcome of the vote.
Voters backed the share sale by a wide margin, with roughly 58% in favour of a sale and 42% opposed, according to the polling data posted on Twitter. More than 3.5 million votes were cast.
“I was prepared to accept either outcome,” Mr. Musk tweeted after the poll closed.
Mr. Musk on Saturday put the potential share sale up for popular vote on the social-media platform as he waded back into the debate over how some of the wealthiest Americans should be taxed.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” he tweeted as he launched the poll, adding, “I will abide by the results of this poll, whichever way it goes.”
Mr. Musk holds more than 17% of Tesla, a stake valued at over US$200 billion, according to the most recent available data in FactSet. One-tenth of that stake could be worth around $21 billion based on the stock’s Friday closing price of $1,222.09.
Mr. Musk and Tesla didn’t immediately respond to requests for comment after polling closed.
Mr. Musk doesn’t accept a cash salary from Tesla. His compensation package entitles him to stock awards. He typically doesn’t sell stock, though he has done so to cover taxes on past stock options. Tesla’s performance has entitled Mr. Musk to additional stock options this year. Selling shares he already holds could help the cash-poor billionaire exercise some of his vested options.
If Mr. Musk were to sell stock, now could be a good time. The current top tax rate on long-term capital gains is 23.8%, but Congress has been considering raising it. Changes in capital-gains tax rates often take effect immediately, to prevent gamesmanship.
Tesla shares have risen about 75% over the last three months.
Investors sometimes interpret stock sales by corporate insiders as a sign that leadership lacks confidence in the company. Neither Mr. Musk nor Tesla have said when a share sale would take place.
People who said they voted on the issue voiced a myriad of reasons for their decision. Luke Ma, a Tesla investor in the San Francisco Bay Area, said he took Mr. Musk’s willingness to sell shares as a sign that the billionaire is confident the stock can weather such a sale. “For shareholders, I think this is a test,” said Mr. Ma, a 45-year-old engineer who said he voted in favour of a sale.
Tesla investor Brian Teeter of Irvine, Calif., said he voted Sunday against a stock sale in part out of concern that if Mr. Musk were to unload shares, it could sink the company’s stock price. “I don’t necessarily like to see an artificial stimulus suddenly disrupt a stock’s price,” said Mr. Teeter, who is 68 and writes travel guidebooks.
Mr. Musk routinely makes unusual pronouncements on Twitter, where he now has more than 62 million followers.
Last week, the Tesla boss raised doubt about a deal between the car maker and Hertz Global Holdings Inc. when he tweeted that no contract had been signed in connection with the car-rental company’s announcement of a 100,000-car order. Last year, he tweeted that he thought Tesla’s stock was too high, sending shares lower. In 2018, he tweeted he might take Tesla private and had “funding secured” for the deal, spurring a Securities and Exchange Commission investigation. Mr. Musk agreed to pay a $20 million fine and relinquish his chairman title.
“Some people use their hair to express themselves. I use Twitter,” Mr. Musk said at a recent conference.
Mr. Musk, considered the world’s richest person after a surge in the value of his Tesla stock, previously blasted a proposed tax on billionaires that would have subjected some holdings of about 700 Americans to annual capital-gains taxes on increases in value.
“Eventually, they run out of other people’s money and then they come for you,” Mr. Musk wrote on Twitter last month.
The plan would have taxed the billionaires’ unrealized gains on publicly traded assets, so they would have owed tax annually on rising values whether the assets were sold or not. (Losses would have offset gains.) This change would have effectively eliminated the billionaires’ ability to defer capital-gains taxes indefinitely.
The plan drew strong opposition and was dropped soon after it was proposed in late October. Opponents feared that the tax could be broadened to apply to the assets of less-wealthy taxpayers, among other things.
In a tweet Saturday he said, “the only way for me to pay taxes personally is to sell stock.”
Mr. Musk’s poll drew a response Saturday from Senate Finance Committee Chairman Ron Wyden. “Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” the Democrat from Oregon said in a statement in which the lawmaker voiced support for a tax on the income of billionaires.
Mr. Musk in September said he “would prefer to stay out of politics” after Texas Gov. Greg Abbott, a Republican, said the billionaire supported the state’s social policies. Mr. Musk, who has since said he would move Tesla’s corporate headquarters from California to Texas, has become increasingly critical of the Biden administration after his car company wasn’t invited to a White House event aimed at accelerating the adoption of electric vehicles.
Selling shares could weaken Mr. Musk’s control over Tesla. Unlike Facebook parent Meta Platforms Inc. and Google parent Alphabet Inc., Tesla lacks a dual-class of stock ownership that gives founders supervoting power over common shareholders.
Mr. Musk has some personal loan obligations pledged against his Tesla stock, according to a company regulatory filing.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: Nov 8, 2021
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
As geopolitical tensions rise, Taiwan is shifting its economy to rely more on the U.S. and other countries but at a cost
TAIPEI—For years, Beijing hoped to win control of Taiwan by convincing its people their economic futures were inextricably tied to China.
Instead, more Taiwanese businesses are pivoting to the U.S. and other markets, reducing the island democracy’s dependence on China and angering Beijing as it sees its economic leverage over Taiwan ebb.
In one sign of the shift, the U.S. replaced mainland China as the top buyer of Taiwanese agricultural products for the first time last year.
Electronics firms such as chip maker Taiwan Semiconductor Manufacturing Co. are also selling more goods to American and other non-Chinese buyers, thanks in part to Washington’s chip restrictions and Apple’s bets on Taiwanese chips.
Overall, Taiwanese exports to the U.S. in the first 10 months of 2023 were more than 80% higher than in the same period of 2018, Taiwanese government data shows. Taiwanese exports to the mainland were 1% lower—a major change from a decade or so ago when China’s and Taiwan’s economies were rapidly integrating.
Taiwan’s outbound investment has also shifted. After flowing mostly to mainland China in the early 2000s, it has now moved decisively toward other destinations, including Southeast Asia, India and the U.S.
Taiwanese electronics giant Foxconn, which assembles iPhones in mainland China, is expanding in India and Vietnam after Apple began pushing its suppliers to diversify.
Chinese state media recently reported that China had opened tax and land-use probes into Foxconn. Though Taiwanese officials and analysts interpreted the probes as a sign that China wants Foxconn founder Terry Gou to drop plans to run in Taiwan’s presidential election in January, some have said Beijing may also be trying to pressure Foxconn into resisting decoupling with China.
“Any attempt to ‘talk down’ the mainland’s economy or to seek ‘decoupling’ is driven by ulterior motives and will be futile,” said a spokeswoman for Beijing’s Taiwan Affairs Office in September. “The mainland is always the best choice for Taiwanese compatriots and businesses.”
Fully decoupling from mainland China’s economy likely isn’t possible, and would be disastrous for Taiwan, not to mention China, even if it were.
Foxconn and other major Taiwanese companies depend heavily on China for parts, testing and buyers. Some 25% of Taiwan’s electronic-parts imports still come from the mainland.
If China’s weakened economy returns to strong growth, it could shift the calculus back in favor of the mainland, where the Communist Party claims Taiwan despite never having ruled it. About 21% of Taiwan’s total goods trade this year has been with mainland China, versus 14% for the U.S., though the U.S. share has risen from 11% in 2018.
“My hunch is that the large manufacturing sectors will try to stay in the Chinese market, even with harsh conditions,” said Alexander Huang, director of the international affairs department of the opposition Kuomintang Party, whose supporters include business people with mainland ties. “If you talk to those business owners, they say, ‘Nah, no way will I give it to my competitors.’”
Even so, many forces are pushing Taiwan to rewire its economic relationship with China.
Trump-era tariffs and Biden administration export controls have raised the cost of sourcing from China, and in some cases prohibited it. U.S. firms are pushing their Taiwanese suppliers to diversify sourcing, and rising wages in China have made it less attractive than before.
Long-running shifts in Taiwanese sentiment toward China—and China’s own efforts to punish the island using its economic leverage—are also factors. China has banned Taiwanese agricultural products such as pineapple and, in 2022, grouper fish, and restricted outbound tourism to Taiwan.
Those restrictions to some degree have backfired, pushing Taiwanese businesses to look elsewhere.
Chang Chia-sheng, who runs a fish farming operation in Taiwan, said his main export target a decade ago was mainland China. But as geopolitical tensions climbed, he looked elsewhere. Sales to Americans have jumped fivefold since 2018, he said. “In the U.S., things just seem to work out more easily,” Chang said.
The U.S. and Taiwan reached an agreement in May on a number of trade and investment measures to deepen ties, though the deal stopped short of reducing tariffs.
In the June quarter of 2023, 63% of revenue at TSMC, which makes most of the world’s most cutting-edge logic chips, came from the U.S., up from 54% in the same period in 2018, according to S&P Global data. Just 12% of TSMC’s revenue now comes from Chinese buyers, down from 22% in the second quarter of 2018.
Taiwan’s government is also encouraging closer economic links with Southeast Asia, South Asia, Australia and New Zealand. Its “New Southbound Policy,” rolled out in 2016, has been the subject of fierce debate in Taiwan, with the Kuomintang Party saying steps to boost relations—like handing out scholarships—aren’t worth the cost.
Exports to “New Southbound” partners have risen, however, to $66 billion in the first nine months of 2023, about 50% higher than the same period in 2016.
“Frankly speaking, we’re responding reactively” to the need for more diverse trading partners, Taiwan’s Economic Minister Wang Mei-hua said. “Taiwan needs to manage the risks on its own, but we also need our allies to join us more in mitigating these risks.”
Together, the U.S. and the six largest Southeast Asian economies accounted for 36% of Taiwanese exports in the third quarter of 2023, according to data from CEIC, surpassing the percentage sent to mainland China and Hong Kong on a quarterly basis for the first time since 2002.
In September, Taiwan sent less than 21% of its exports to the mainland, the lowest percentage since the global financial crisis.
Taiwanese foreign investment into mainland China, steady at around $10 billion a year for most of the early 2010s, plummeted in late 2018 and has since been running at about half that level, according to Taiwanese government data. In 2023 so far, just 13% of Taiwan’s investment went to mainland China; 25% went to other Asian locations, and nearly half went to the U.S.
A survey of Taiwanese businesses conducted last year on behalf of the Center for Strategic and International Studies, a Washington think tank, found that nearly 60% had moved or were considering moving some production or sourcing out of China—a significantly higher rate than European or American firms.
Jay Yen, chief executive of Yen and Brothers, a Taiwanese frozen-food processing company, said his firm received a government subsidy of around $75,000 to market his products to American consumers. China now only accounts for about 3% of its revenue, he said.
That said, “if you really have to consider the risks of a war between the U.S. and China and its potential impact on Taiwan, you might want to place your bets on a third country—neither China nor the U.S.,” Yen added.
After China began to open up its economy in the late 1970s, Taiwanese businesses were among the first investors.
By the 2000s, China seemed to be succeeding in its strategy of integrating the two economies, with more than 28% of Taiwan’s exports going to the mainland in 2010, from less than 4% a decade earlier.
Direct flights between the two sides were normalised for the first time in decades. Mainland tourists were allowed to visit Taiwan on their own.
By 2014, the tide was turning as more Taiwanese grew worried about over dependence on China. Student demonstrators protested against a trade pact, later abandoned, that would have deepened ties with China. President Tsai Ing-wen, who took office in 2016, has pushed to diversify Taiwan’s economy.
China has responded by moving trade issues more into the spotlight.
In April, it opened an investigation into Taiwanese trade restrictions that it says limit exports of more than 2,400 items from the mainland to the island in violation of World Trade Organization rules. In October, China’s Ministry of Commerce announced the probe would be extended until Jan. 12—the day before Taiwan’s coming election.
Taiwan’s government has called the probe politically motivated.
Chinese officials have implied that Beijing could suspend preferential tariff rates for some Taiwanese goods in China under a 2010 deal signed when Kuomintang’s Ma Ying-jeou was president. Beijing has also reacted angrily to Taiwan’s recent trade agreement with the U.S.
For Taiwanese companies, building and operating new factories in places other than China isn’t cheap or easy. Protests have at times disrupted operations at Indian plants operated by Foxconn and Wistron, another Apple supplier. In September, a fire halted production at a Taiwanese facility in Tamil Nadu.
Still, some Taiwanese businesspeople have clearly soured on China.
“The electronics industry has already become a Chinese empire, not a Taiwanese one,” says Leo Chiu, who worked in mainland China in quality control for an electronics manufacturer for 14 years before concluding he couldn’t move up further there and returning to Taiwan in 2019. Many of his old colleagues have left, he said.
“If Xi Jinping steps down, there’s still a chance it could change,” says Chiu. “But I think it’s very hard.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’