Tesla will remain volatile until Elon Musk abides by the results of his Twitter poll and sells stock, Wedbush says

• Tesla stock will remain volatile until Elon Musk abides by the results of his recent Twitter poll, according to Wedbush analyst Dan Ives.
• More than 2 million Twitter users voted in favor of Musk selling 10% of his Tesla stake.
• "We would rather Musk rip the band-aid off now and sell this portion of stock rather than it lingering over the next year," Ives said.

Tesla stock will likely remain volatile until CEO Elon Musk abides by the results of his recent Twitter poll and sells 10% of his stake in the company.

Over the weekend, more than 3 million people voted in a Twitter poll held by Musk, who asked his followers if they support him selling 10% of his Tesla stake. A decisive 58% supported Musk selling the stake.

"I will abide by the results of this poll, whichever way it goes," Musk said in a follow-up tweet. Since the poll, Tesla stock has fallen as much as 19% over a three-day period, threatening its recent $1 trillion market value milestone.

According to Wedbush analyst Dan Ives, shares of Tesla will likely remain volatile until Musk goes ahead with his plans to sell his stake.

"Now all focus will be on the filing front to see if Musk ultimately goes through with these stock sales and thus has put pressure on the stock accordingly with investors awaiting the outcome," Ives said in a Wednesday note.

The share sale shouldn't come as a surprise to many, according to Ives. Musk currently owns about 22% of Tesla, a stake worth more than $200 billion as of Wednesday morning, and he has a big tax bill coming due as 23 million deep in-the-money options that have already vested expire in August 2022.

"It was viewed by many on the Street that he would sell up to ~5%/6% of his ownership stake, with 10% being a higher amount that could surprise some investors but ultimately it's a digestable number we are not overly concerned about," Ives said.

But the headline volatility of Musk's Twitter poll and likely share sale could be abated if he sells now, according to Ives.

"We would rather Musk rip the band-aid off now and sell this portion of stock rather than it lingering over the next year and feeding into any non-fundamental bear thesis on the story," Ives said, before reiterating his bull thesis on the electric vehicle manufacturer along with a $1,800 bull-case price target.