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Elon Musk asked Twitter about selling 10% of his Tesla stock. Survey says: yes – CBC.ca
Tesla, Inc. CEO Elon Musk should sell about 10 per cent of his company stock, according to 57.9 per cent of people who voted on his Twitter poll asking users of the social media network whether he should offload the stake.
“I was prepared to accept either outcome,” Musk said, after the voting ended.
The world’s richest person tweeted on Saturday that he would offload 10 per cent of his stock if users approved the proposal. Musk has previously said he would have to exercise a large number of stock options in the next three months, which would create a big tax bill. Selling some of his stock could free up funds to pay the taxes.
As of June 30, Musk’s shareholding in Tesla came to about 170.5 million shares, and selling 10 per cent would amount to close to $21 billion US based on Friday’s closing, according to Reuters calculations.
The poll garnered more than 3.5 million votes.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” Musk said on Saturday, adding that he does not take cash salary or bonus “from anywhere,” and only has stock.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.<br><br>Do you support this?
—@elonmusk
Note, I do not take a cash salary or bonus from anywhere. I only have stock, thus the only way for me to pay taxes personally is to sell stock.
—@elonmusk
U.S. Senate Democrats have unveiled a proposal to tax billionaires’ stocks and other tradeable assets to help finance President Joe Biden’s social spending agenda and fill a loophole that has allowed them to defer capital gains taxes indefinitely.
Musk has criticized the proposal, saying, “Eventually, they run out of other people’s money and then they come for you.”
Tesla valued at over $1T
U.S. Sen. Ron Wyden, who chairs the Senate’s finance committee and floated the tax proposal, said on Saturday: “Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll.”
He added, “It’s time for the Billionaires Income Tax.”
Including stock options, Musk owns a 23 per cent stake in Tesla, the world’s most valuable car company whose market value recently exceeded $1 trillion US. He also owns other valuable companies, including SpaceX.
His brother, Kimbal Musk, on Friday sold 88,500 Tesla shares, becoming the latest board member to offload a large number of Tesla stock, which hit record highs.
A week ago, Musk said on Twitter that he would sell $6 billion US in Tesla stock and donate it to the United Nations’ World Food Programme, provided the organization disclosed more information about how it spent its money.
Gary Black, a portfolio manager at The Future Fund who’s bullish on Tesla, tweeted that Musk’s potential stock sale would lead to “1-2 days of modest selling pressure” but that there would be solid institutional demand to snap up the shares at a discount.
Wrong. There are $3T active growth managers underweight by an avg 26% (per BOA) x 4% weight = $30B in AUM who’d like to buy <a href=”https://twitter.com/search?q=%24TSLA&src=ctag&ref_src=twsrc%5Etfw”>$TSLA</a> at a discount. That’s 25M shares of potential demand who could easily buy Elon’s 17M shares. It’ll be 1-2 days of modest selling pressure. <a href=”https://t.co/ZXmQBbKhAi”>https://t.co/ZXmQBbKhAi</a>
—@garyblack00
Musk has said he did not want to borrow against stock to pay taxes because stock value could go down.
He has an option to buy 22.86 million shares at $6.24 US each, which expires on Aug. 13, 2022, according to a Tesla filing. The option exercise could lead to gains of roughly $28 billion US based on Tesla’s Friday closing price of $1,222.09 US.
In September, Musk said he is likely to pay taxes of over half the gains he would make from exercising options. Last year, he said he relocated from California to Texas, which should lead to a cut to the total tax bill because Texas has no income tax, experts say.
“[It] seems crazy to borrow that much to pay taxes, so I have to assume he’d need to liquidate a substantial amount of the shares purchased from the option exercise to pay taxes,” said Bryan Springmeyer, a lawyer at San Francisco-based law firm Springmeyer Law.
Business
Tesla Promises Cheap EVs by 2025 | OilPrice.com – OilPrice.com
Tesla has promised to start selling cheaper models next year, days after a Reuters report revealed that the company had shelved its plans for an all-new Tesla that would cost only $25,000.
The news that Tesla was scrapping the Model 2 came amid a drop in sales and profits, and a decision to slash a tenth of the company’s global workforce. Reuters also noted increased competition from Chinese EV makers.
Tesla’s deliveries slumped in the first quarter for the first annual drop since the start of the pandemic in 2020, missing analyst forecasts by a mile in a sign that even price cuts haven’t been able to stave off an increasingly heated competition on the EV market.
Profits dropped by 50%, disappointing investors and leading to a slump in the company’s share prices, which made any good news urgently needed. Tesla delivered: it said it would bring forward the date for the release of new, lower-cost models. These would be produced on its existing platform and rolled out in the second half of 2025, per the BBC.
Reuters cited the company as warning that this change of plans could “result in achieving less cost reduction than previously expected,” however. This suggests the price tag of the new models is unlikely to be as small as the $25,000 promised for the Model 2.
The decision is based on a substantially reduced risk appetite in Tesla’s management, likely affected by the recent financial results and the intensifying competition with Chinese EV makers. Shelving the Model 2 and opting instead for cars to be produced on existing manufacturing lines is the safer move in these “uncertain times”, per the company.
Tesla is also cutting prices, as many other EV makers are doing amid a palpable decline in sales in key markets such as Europe, where the phaseout of subsidies has hit demand for EVs seriously. The cut is of about $2,000 on all models that Tesla currently sells.
By Charles Kennedy for Oilprice.com
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Business
Why the Bank of Canada decided to hold interest rates in April – Financial Post
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Divisions within the Bank of Canada over the timing of a much-anticipated cut to its key overnight interest rate stem from concerns of some members of the central bank’s governing council that progress on taming inflation could stall in the face of stronger domestic demand — or even pick up again in the event of “new surprises.”
“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” according to a summary of deliberations for the April 10 rate decision that were published Wednesday. “They felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall, and to avoid jeopardizing the progress made thus far.”
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Others argued that there were additional risks from keeping monetary policy too tight in light of progress already made to tame inflation, which had come down “significantly” across most goods and services.
Some pointed out that the distribution of inflation rates across components of the consumer price index had approached normal, despite outsized price increases and decreases in certain components.
“Coupled with indicators that the economy was in excess supply and with a base case projection showing the output gap starting to close only next year, they felt there was a risk of keeping monetary policy more restrictive than needed.”
In the end, though, the central bankers agreed to hold the rate at five per cent because inflation remained too high and there were still upside risks to the outlook, albeit “less acute” than in the past couple of years.
Despite the “diversity of views” about when conditions will warrant cutting the interest rate, central bank officials agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target, according to the summary of deliberations.
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They considered a number of potential risks to the outlook for economic growth and inflation, including housing and immigration, according to summary of deliberations.
The central bankers discussed the risk that housing market activity could accelerate and further boost shelter prices and acknowledged that easing monetary policy could increase the likelihood of this risk materializing. They concluded that their focus on measures such as CPI-trim, which strips out extreme movements in price changes, allowed them to effectively look through mortgage interest costs while capturing other shelter prices such as rent that are more reflective of supply and demand in housing.
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They also agreed to keep a close eye on immigration in the coming quarters due to uncertainty around recent announcements by the federal government.
“The projection incorporated continued strong population growth in the first half of 2024 followed by much softer growth, in line with the federal government’s target for reducing the share of non-permanent residents,” the summary said. “But details of how these plans will be implemented had not been announced. Governing council recognized that there was some uncertainty about future population growth and agreed it would be important to update the population forecast each quarter.”
• Email: bshecter@nationalpost.com
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Business
Meta shares sink after it reveals spending plans – BBC.com
Shares in US tech giant Meta have sunk in US after-hours trading despite better-than-expected earnings.
The Facebook and Instagram owner said expenses would be higher this year as it spends heavily on artificial intelligence (AI).
Its shares fell more than 15% after it said it expected to spend billions of dollars more than it had previously predicted in 2024.
Meta has been updating its ad-buying products with AI tools to boost earnings growth.
It has also been introducing more AI features on its social media platforms such as chat assistants.
The firm said it now expected to spend between $35bn and $40bn, (£28bn-32bn) in 2024, up from an earlier prediction of $30-$37bn.
Its shares fell despite it beating expectations on its earnings.
First quarter revenue rose 27% to $36.46bn, while analysts had expected earnings of $36.16bn.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said its spending plans were “aggressive”.
She said Meta’s “substantial investment” in AI has helped it get people to spend time on its platforms, so advertisers are willing to spend more money “in a time when digital advertising uncertainty remains rife”.
More than 50 countries are due to have elections this year, she said, “which hugely increases uncertainty” and can spook advertisers.
She added that Meta’s “fortunes are probably also being bolstered by TikTok’s uncertain future in the US”.
Meta’s rival has said it will fight an “unconstitutional” law that could result in TikTok being sold or banned in the US.
President Biden has signed into law a bill which gives the social media platform’s Chinese owner, ByteDance, nine months to sell off the app or it will be blocked in the US.
Ms Lund-Yates said that “looking further ahead, the biggest risk [for Meta] remains regulatory”.
Last year, Meta was fined €1.2bn (£1bn) by Ireland’s data authorities for mishandling people’s data when transferring it between Europe and the US.
And in February of this year, Meta chief executive Mark Zuckerberg faced blistering criticism from US lawmakers and was pushed to apologise to families of victims of child sexual exploitation.
Ms Lund-Yates added that the firm has “more than enough resources to throw at legal challenges, but that doesn’t rule out the risks of ups and downs in market sentiment”.
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