It is unusual for a CEO like Musk to buy shares outright. Typically, business leaders acquire stock through options that allow them to purchase shares at a fixed discount. However, Musk’s direct purchase of $1 billion worth of Tesla shares is seen as a sign of his confidence in the company’s future and his intention to maintain his stake. The announcement led to a 7% increase in Tesla’s stock price when markets opened on Monday. Tech analyst Dan Ives from Wedbush Securities remarked that this move represents a significant display of confidence from Musk, which is reassuring for investors after a tumultuous year for both Musk and Tesla shareholders.
For Musk, who has a net worth of $20 billion according to the Bloomberg Billionaires Index, this $1 billion investment is relatively minor. The rise in Tesla’s share price on Monday also increased Musk’s net worth by approximately $8.6 billion, effectively offsetting the cost of his investment. While Musk’s fellow billionaire and Tesla board member Larry Ellison could also easily afford such an investment, his wealth surpasses Musk’s by around $60 billion. Tesla shares have experienced significant volatility recently. The stock price doubled following the U.S. election as investors speculated that Musk’s connections with then President-elect Donald Trump would benefit the company, especially in self-driving technology and its robotaxi plans.
However, following Musk’s investment in mid-December, Tesla shares have been in decline, losing all post-election gains and trading below their starting point by April. Additionally, Musk is involved in negotiations this week regarding a proposed pay package that could ultimately grant him up to $1 trillion in Tesla stock options, contingent on the company meeting ambitious sales and valuation benchmarks.
