Tesla and KakaoPay

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Tesla and KakaoPay




The author is the head of Factpl team of the JoongAng Ilbo.

At first, I was curious why eccentric Tesla CEO Elon Musk would take a Twitter survey to decide whether or not to sell 10 percent of the company’s stock. At the time, Tesla stock was at its highest, trading at over $1,200 per share. Why would he do such a thing that will surely make the stock drop?

Musk’s explanation — or excuse — was that he never made a profit because he didn’t sell any stocks, so he’d rather sell because he was being criticized for evading taxes. Investors reacted immediately, thinking it was a signal that the price was at its highest. Tesla’s stock price fell by more than 15 percent within a week of the tweet.

In the end, Musk’s Twitter survey turned out to be a superb tax-saving strategy. He exercised his 10-year-old stock option and purchased $1,200 Tesla stocks at $6.24 per share. But as the stock price fell, he could cut his payable tax by more than 450 billion won ($373.8 million).

But this eccentric behavior didn’t seem to have shaken Tesla investors’ trust completely. While stock prices fell due to various factors, Tesla still has the fifth largest market cap on the Nasdaq.

In a “similar” development, eight executives of KakaoPay — the payment affiliate of internet giant Kakao — exercised their stock option and sold their stocks purchased at 5,000 won per share at 200,000 won less than a month after the company went public. I am not sure if they want to save on tax like Musk or want to cash out.

But it doesn’t matter now. The sell-off of the executives of the company listed for a month was enough to make investors question the company’s “sense of purpose.” KakaoPay’s stock fell to half of its peak in late November. Even if it’s legal, that was the price of a choice that executives of a listed company shouldn’t have made.

Despite the same eccentric acts, why are Tesla and KakaoPay treated differently by shareholders? Established in 2003 and listed in 2010, Tesla realized the vision of electric vehicles and brought huge profits to investors. When the National Pension Service (NPS) invested in Tesla and recorded a return of 760 percent as of February 2021, I was pleased as a pension payer. No matter how eccentric the owner may be, shareholders won’t leave as long as they believe the company can be trusted in the long term.

Last year, both Korea and the U.S. had the largest IPOs in history. More companies need to go public as it offers a chance to share the fruits of business growth not just among a few investors but with more people. I hope more companies have vision and leadership as reliable as their stock prices shortly right after going public. 

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