By Subrat Patnaik and Vidya Ranganathan

(Reuters) – Tesla Inc shares fell 4.5% on Monday as investors prepared for its chief Elon Musk’s proposed sale of about a tenth of his holdings in the electric-car maker following his Twitter poll.

Musk, the world’s richest person, tweeted on Saturday that he would offload 10% of his stake if users of the social media network approved the proposal.

The Twitter poll asking Musk’s followers if he should sell stock garnered more than 3.5 million votes, and 57.9% of the people voted “Yes”.

Musk had 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.

“I only have stock, thus the only way for me to pay taxes personally is to sell stock,” Musk wrote along with his poll. “I was prepared to accept either outcome.”

The electric-vehicle maker’s shares were down at $1,167.66 in early trading, and if the losses hold, it would wipe off about $54 billion from the company’s market value.

AT STAKE IS $21 BILLION

Market participants expected speculators would try to front-run his selling. Musk owned about 170.5 million shares as of June 30, and a 10% sale would amount to about $21 billion based on Friday’s closing price, according to a Reuters calculations.

Including stock options, he owns 23% stake in the world’s most valuable car company.

In the three months to Nov. 4, company insiders at Tesla sold $259.62 million worth of shares, excluding dispositions of indirectly held shares, according to Refinitiv data.

Musk’s poll follows a proposal by U.S. Senate Democrats to tax stocks and other tradeable assets of billionaires to help finance President Joe Biden’s social spending plan and fill a loophole that allowed the rich to indefinitely defer capital gains taxes.

“The last thing you do when offloading a massive exposure is to reveal your hand,” said Chris Weston, head of research at broker Pepperstone in Melbourne.

“The buyers tend to step away when you have an overhang like this, but this is no ordinary story and is Musk’s way of getting back at the proposal to tax the elite with gains on unrealized profits.”

Last month, Tesla breached a trillion dollars in market capitalization, becoming the fifth U.S. company to join a club which includes Apple, Microsoft, Amazon and Alphabet.

“The dip is not going to last too long, because Tesla has had such a phenomenal record of bouncing back from these sort of selloffs,” said David Madden, markets analyst at Equiti Capital in London.

REGULATORY SCRUTINY

Known for his Twitter banter, announcements and lively interactions with followers, Musk has had his share of run-ins with financial regulators.

The billionaire was fined $20 million by the U.S. Securities and Exchange Commission (SEC) for tweeting in 2018 that he was considering taking Tesla private at $420 a share and had secured funding. The SEC also asked him to step down as chairman.

Investors will keep an eye on any response from the regulators on Musk’s Twitter poll, especially as the regulator had ordered Tesla to vet any material public communications Musk made regarding the EV maker following his 2018 tweet.

(Reporting by Vidya Ranganathan in Singapore and Subrat Patnaik, Sruthi Shankar, Tanvi Mehta, Anisha Sircar in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)