Elon Musk revealed Monday that he purchased $1 billion worth of Tesla’s stock – a major show of confidence that sent shares of the electric car maker surging 7% in early trading.
The 54-year-old billionaire bought 2.57 million Tesla shares through a trust on Friday, according to a regulatory filing.
The stock closed Monday at $410.26, up 3.6%, pushing the company back into positive territory for the year despite a recent sales slump that has crushed its earnings.
Musk’s rare buy came on the heels of Tesla’s move to extend him an unprecedented $1 trillion compensation package over the next decade.
He owns about 20% of the company – a stake worth about $250 billion.
“He is a generational leader,” Tesla board chiar Robyn Denholm said of Musk on Friday in an interview with Bloomberg. “There aren’t any other people out there like Elon who can actually lead the company over the next decade or so.”
Tesla and Musk are each doubling down during a challenging time for the company, which recently experienced its worst sales drop in a decade as it contends with increased competition from China, concerns about its aging product lineup and the end of federal subsidies for electric vehicle purchases.
In July, Musk admitted to Wall Street analysts that Tesla “probably could have a few rough quarters” ahead. At the same time, he touted his vision for Tesla to expand its focus beyond selling cars to launching a nationwide autonomous driving fleet and selling “Optimus” humanoid robots.
Shareholders will vote in November on whether to approve Musk’s new compensation package – which was negotiated after a Delaware judge shot down the Tesla honcho’s previous deal for being too excessive.
In order to earn the full amount, Musk has to meet a number of steep performance benchmarks, such as delivering 20 million cars and 1 million robots and getting 1 million robotaxis in active operation.
Wedbush analyst Dan Ives described Musk as a “wartime CEO” whose involvement is crucial for Tesla to take advantage of long-term opportunities in artificial intelligence and robotics.
“We believe Tesla and Musk are heading into a very important chapter of their growth story as the AI Revolution takes hold and the Robotaxi opportunity is now a reality on the doorstep,” Ives said in a note to clients.
Tesla’s board has argued that the massive deals are necessary to ensure Musk remains focused on Tesla despite his various other projects, which include xAI and the X social media platform as well as SpaceX and his political maneuverings.
Prior to his latest move, Musk hadn’t bought stock on the open market since February 2020.
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