Tesla’s new big investor is…Elon Musk.
The CEO of the EV maker bought $1 billion worth of Tesla shares through a revocable trust last week. That marks the first time Musk has purchased Tesla’s stock in the open market since 2020, according to Bloomberg.
The reveal of Musk’s purchase comes on the same day Tesla Chair Robyn Denholm soft launched a massive $1 trillion pay package for the CEO. Denholm reassured Bloomberg TV that the giant compensation plan is meant to account for an “outsized proportion” of Musk’s time over the next decade.
Shares of Tesla rose 3.62% today, finally popping into positive territory for the year after soaring 25% over the last three months.
The bumpy road ahead
Tesla shareholders’ logic seems pretty straightforward: If the CEO of the company is buying that much stock, that’s an indicator the people at the tippy top see positive things ahead for the business. Shareholders are also hoping that Musk’s decision to pivot the EV maker into an AI and robotics company has his full attention, and that this recent purchase underscores his newfound commitment to the company’s next evolution.
In addition to that basic dynamic, Tesla investors have a unique relationship with Musk, viewing him as synonymous with the company’s success instead of just another CEO.
“Musk is driving this vision and is now in a ‘wartime CEO’ mode which is music to the ears of Tesla bulls with this AI Arms Race happening across the tech world,” wrote Wedbush analyst and Tesla bull Dan Ives in a rather dramatic note yesterday.
Others are not quite that optimistic. After all, Tesla’s valuation is pretty insane right now: It’s currently trading at roughly 168 times its estimated 2026 earnings, compared to the rest of the Mag 7, which is only trading at an average of 28 times future earnings.
Investors’ optimism doesn’t seem to match reality. Last year, Tesla’s US EV market share dropped to 40%—its lowest point since 2017—partially due to backlash surrounding Musk’s foray into right-wing politics.
Despite his purchase of Tesla stock seeming to indicate that Musk is focused on the company, it’s clear to anyone with an X account that he may remain more distracted than shareholders would like.—LB
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