Tesla shares surged by 6% in early Monday trading following CEO Elon Musk’s announcement of a $1 billion stock purchase, signaling strong confidence in the company’s prospects.
This marks Musk’s first open-market buy since early 2020 and comes at a pivotal moment for Tesla as it strives to become a leader in AI and robotics amidst slowing car sales.
The purchase highlights Musk’s quest for more control over Tesla, occurring shortly after the board proposed a $1 trillion compensation package for him, addressing his demands and outlining ambitious targets.
Musk bought 2.57 million shares on Friday, with prices ranging from $372.37 to $396.54 per share, based on a Monday regulatory filing.
“This move is the clearest signal that Musk is fully committed again… the Tesla-Musk storyline is back on track after a rocky start to the year,” stated Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Musk has persistently sought a larger stake and more voting power at Tesla, previously expressing a preference to develop AI and robotics products outside of Tesla if he couldn’t achieve 25% voting power.
As of December, Musk held around a 13% stake, according to LSEG data.
Despite Tesla shares climbing for the third consecutive session on Monday, the stock remains one of the poorest performers among the “Magnificent 7” tech megacap stocks, having decreased 2% in value year-to-date, through the last close.
Tesla’s recent quarterly earnings showed ongoing margin pressures due to declining EV demand, rising costs, and competition.
Nevertheless, Tesla board chair Robyn Denholm dismissed concerns about Musk’s political activities affecting sales, noting that Musk is now “front and center” at the company after months at the White House.
