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Recently (26 October 2021), CNN published an article with the eye-catching headline:

2% of Elon Musk's wealth could solve world hunger, says director of UN food scarcity organization

This was subsequently debunked on Twitter to which Elon Musk replied:

If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.

Drama ensued (and is still ensuing). David Beasley, who was CNN's source, tweeted Headline not accurate. $6B will not solve world hunger. CNN later modified the misleading title of their original article to the vacuously true "2% of Elon Musk's wealth could help solve world hunger". (See e.g. Can we end poverty for $US175 billion per year? to get an idea of how unrealistic CNN's original title is.) TL;DR: $US6 billion is being requested to prevent 42 million people dying from starvation.

Putting aside the debunked claim that $US6 billion could “solve world hunger”, ...

Question: Could Elon Musk sell $US6 billion in stock “right now”?

It seems fairly clear that Elon Musk believes he could actually do this if he chose to, and has requested specifics in response to David Beasley's clarification.

However (in my mind at least), selling $US6 billion in stock sounds extraordinary complicated; I would think it’d take months or even years to do so, if it were even possible at all.

Rebecca J. Stones
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    Deleted political opinions about whether $6b could solve world hunger. Comments are for improving the question. – Oddthinking Nov 02 '21 at 16:56
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    I think the problem here is that "right now" is a very imprecise term. It could be the second Musk recieves a reply (obviously impossible), or it could be as long as millenia: e.g. "The Earth is in an interglacial period right now" :-) – jamesqf Nov 03 '21 at 04:02
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    Interesting discussion [moved to chat](https://chat.stackexchange.com/rooms/131105/discussion-on-question-by-rebecca-j-stones-could-elon-musk-sell-us6-billion-in). Please continue it there. –  Nov 03 '21 at 13:13
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    This question boils down to explaining stocks trading rules (off topic, or there's at least much better sites), while completely neglecting that musk is clearly criticizing the claim that $6B would solve world hunger using an "argument to absurdity". $6B is nickels to some super-wealthy and many western countries. I'd vtc if I had any signal the community agrees, but there's no close votes... –  Nov 03 '21 at 13:28

1 Answers1

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The current trading volume of Tesla stock is at an average of 20M shares per day. At the current stock price, that's a volume of around $24B per day. However trading volumes fluctuate and today a total of 56M shares were moved around or $67B. So the market naturally sees fluctuations that are far bigger than Elon's proposed sale of stock. Elon would also be extremely likely to sell the stock via a block trade to minimize influence on the stock price.

That being said, company insiders have to report their stock sales in advance and wait for the next window period. For Tesla this would be around January 2022 given their schedule of quarterly earnings disclosures. As a company insider he is also prohibited by the same SEC rules from margin borrowing against his Tesla stocks, so he couldn’t use his stocks as collateral.

So could he sell the stock "right now"? No, according to SEC rules he would have to wait for the next Tesla trading window.

Could he obtain $6B "right now" to send to WFP? Most likely yes, by using whatever other liquid investments/cash he has or borrowing the money. He won’t be allowed to use Tesla stock as collateral but someone with his reputation could certainly secure a loan for 2% of his current net worth.

Could he quickly sell $6B on the stock market assuming it was cleared by the SEC? Yes, that's an amount within the usual trading volumes seen for Tesla shares.

JonathanReez
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    A block trade essentially spreads out the sale over time... or involves finding (beforehand) an investor willing to buy the whole thig. – Fizz Nov 02 '21 at 07:03
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    @Fizz is there a general formula on how long a block trade would take given current stock price/volume? – JonathanReez Nov 02 '21 at 07:04
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    Given that 's it's an "umbrella term" for various practices, probably no. There's more concrete data on that at https://finance.yahoo.com/news/block-trade-002326076.html – Fizz Nov 02 '21 at 07:05
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    And a $19B block trade "blew up" (in March), in the sense that it was discovered as such, sending the stocks involved down (by $33bn). https://www.ft.com/content/1b9119b2-0d8b-4a9d-b0a2-d10a021cd71b $6B might pass though. – Fizz Nov 02 '21 at 07:14
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    And then we have to assume that Musk actually holds such a volume in public stock that can actually be traded. If he's like other company owners I know and have known, a good part of their stock is excluded from public trade explicitly by the company statutes, and can only be sold either to other board members or family members (depending on the management structure of the company). – jwenting Nov 02 '21 at 12:42
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    @jwenting But we're only talking about 2% of his wealth. If half of that it Tesla stock, it's only 4% of his stock, and maybe that's within the portion that he can trade publically. – Barmar Nov 02 '21 at 14:37
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    @jwenting he received 11 billion in stock options [this year](https://www.reuters.com/business/autos-transportation/teslas-elon-musk-qualifies-11-billion-options-payout-2021-04-26/) as compensation for good performance. Even if his original share is illiquid, I can’t find any mentions of these options being illiquid as well. – JonathanReez Nov 02 '21 at 15:37
  • @JonathanReez I don't see any purpose in giving illiquid stock as a performance bonus. Might as well give the person real estate on the moon then. – Neil Meyer Nov 02 '21 at 18:14
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    @NeilMeyer Restricted stock units are a common form of executive compensation. They normally become marketable either at a fixed date in the future, or a specified amount of time after the employee leaves the company. The purpose of RSUs is to give the recipient an incentive to focus on long-term rather than short-term company performance. – Nobody Nov 02 '21 at 19:10
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    @Nobody in any case arguing over whether or not *Elon Musk* can procur 6 billion is ridiculous at the end of the day :-) – JonathanReez Nov 02 '21 at 19:15
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    @JonathanReez No argument there! – Nobody Nov 02 '21 at 19:18
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    @JonathanReez Elon doesn't want real estate on the moon, he wants it on mars :-) – boatcoder Nov 03 '21 at 03:47
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    @JonathanReez I've in the past been offered stock options that were illiquid for the term of my employment with the company. It's pretty common. – jwenting Nov 03 '21 at 08:46
  • @JonathanReez yup, we're talking about the specific 6B in stock rather than 6B in whatever funds. – jwenting Nov 03 '21 at 08:47
  • The final paragraph shows why the question is a bad fit here. It basically says, *Sure, if all the obstacles weren't in the way*. The question boils down to explaining stocks trading rules, while completely neglecting that musk is clearly criticizing the claim that $6B would solve world hunger using an "argument to absurdity". –  Nov 03 '21 at 13:24
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    @fredsbend The OP already understands the "solve world hunger" part. The OP says, "Selling $US6 billion in stock sounds extraordinary complicated; I would think it’d take months or even years to do so, if it were even possible at all." This answer explains that selling 6bn in stock isn't _inherently_ that difficult and that the difficulties in this specific case would be because of Musk's position as a company insider. – user3067860 Nov 03 '21 at 15:05
  • @fredsbend done - added citation for both disclosures/trading windows and a link to one of the many brokerages offering loans with stock used as collateral (aka margin borrowing). You can borrow money for whatever purpose you want, its not a regular bank loan where you have to specify what you're going to use the money for. I can do it right now for my own brokerage account, up to the value of stocks in my account. – JonathanReez Nov 03 '21 at 15:53
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    @user3067860 You're making my point. It's a bad *question*. –  Nov 03 '21 at 16:15
  • Good edits! Thank you. The question might be bad, but we still have to keep our answers tight. –  Nov 03 '21 at 16:20
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    @fredsbend Nonsense. It's a perfectly reasonable question. Someone famous has publicly made a claim, the OP doubts some specifics of that claim, the OP has asked about those specifics, including the background so that we can understand what the original person making the claim was referring to. People getting sidetracked by the background instead of answering the question isn't really the OP's fault, and if the OP hadn't included background it could have been confusing about things like which stock and who's selling, which this answer points out is something that matters. – user3067860 Nov 03 '21 at 17:52
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    @fredsbend you were right - margin borrowing is specifically banned for insider stocks so while it would normally be allowed, Musk couldn’t do this for Tesla stock. Updated the answer. – JonathanReez Nov 03 '21 at 18:39
  • @user3067860 It's not remotely reasonable to think Musk means anything other than "$6B won't solve world hunger". He could quite easily muster that sum, one way or another. It's trivial to ask "How would you sell that stock anyway?" Starting a discussion about stock selloffs is not the point of the statement. –  Nov 03 '21 at 19:16
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    @fredsbend But we don't care what point Musk was trying to make. Him making the claim in passing while talking about something else doesn't make it less of a claim. And certainly enough people read it, so it's notable. Are we supposed to suspend skepticism because he happened to be talking about something else at the same time? – user3067860 Nov 03 '21 at 19:58
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    He absolutely could effectively liquidate $6bn in Tesla stock in order to donate it. While company insiders typically are not allowed to sell stock during blackout periods, there is no such restriction on donating stock. He could set up a charitable vehicle, donate $6bn of Tesla stock to that vehicle, which could then liquidate the stock. – A Simmons Nov 04 '21 at 00:06
  • @ASimmons I'm seeing [conflicting information](https://www.lexology.com/library/detail.aspx?g=2232230e-63a7-46fd-a152-87a77c144fb1) on this online. Care to add an answer of your own to clarify this? – JonathanReez Nov 04 '21 at 00:27