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Twitter users say ‘yes’ to Musk’s proposal to sell 10% of his Tesla stock

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November 7, 2021

By Aishwarya Nair and Hyunjoo Jin

(Reuters) – Tesla Inc CEO Elon Musk should sell about 10% of his Tesla stock, according to 57.9% 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.

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The world’s richest person tweeted on Saturday that he would offload 10% 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% would amount to close to $21 billion 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.

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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.”

Senate Finance Committee Chairman Ron Wyden, who 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.”

“It’s time for the Billionaires Income Tax.”

Including stock options, Musk owns a 23% stake in Tesla, the world’s most valuable car company whose market value recently exceeded $1 trillion. He also owns other valuable companies including SpaceX.

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His brother Kimbal Musk on Friday sold 88,500 Tesla shares, becoming the latest board member to offload a large number of Tesla stocks which hit record highs.

A week ago, Musk said on Twitter that he would sell $6 billion in Tesla stock and donate it to the United Nations’ World Food Program (WFP), provided the organization disclosed more information about how it spent its money.

Tesla bull Gary Black, portfolio manager at The Future Fund, said that Musk’s potential stock sale would lead to “1-2 days of modest selling pressure,” but said there would be solid institutional demand to snap up the shares at a discount.

TAXES ON STOCK OPTION EXERCISE

Musk has said he does not want to borrow against stock to pay taxes because stock value could go down.

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He has an option to buy 22.86 million shares at $6.24 each, which expires on Aug. 13 next year, according to a Tesla filing. The option exercise could lead to gains of roughly $28 billion based on Tesla’s Friday closing price of $1,222.09.

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 has been 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, an attorney at San Francisco-based law firm Springmeyer Law.

(Reporting by Aishwarya Nair and Vishal Vivek in Bengaluru and Hyunjoo Jin in San Francisco; Editing by Daniel Wallis and Chizu Nomiyama)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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