Telsa rallies after Musk pumps in $1 billion to buy shares

by · UPI

Sept. 15 (UPI) -- Tesla's share price surged by more than 8% in trading in New York on Monday after Elon Musk, the EV-maker's CEO, invested around $1 billion through a trust -- his first open market purchase of the stock in more than five years.

Traders and investors saw the purchase of the 2.57 million shares on Friday, his largest in the 20 years since he first took his first stake, as a sign of Musk's confidence in the firm he built into a global EV leader, helping the share price rally by more than $30 to $428.05 in the NASDAQ pre-market.

Musk paid between $372 and $396 per share. The last time he invested, in February 2020, he only paid around $50, buying 200,000 shares at a cost of $10 million.

The market performance caps off a strong quarter in which the stock has climbed by more than 25% after bottoming out at $293.94 on July 7.

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Tesla has had a difficult time for most of this year, with Musk's close association with President Donald Trump and his high-profile role as face of the administration's jobs and cost-cutting program, triggering a public backlash that caused sales of its cars to falter in the United States and Europe.

Musk's market play came seven days after Tesla said it would seek authority from shareholders for a new $975 billion remuneration package for Musk, conditioned on his delivering an ambitious turnaround program involving a pivot to concentrate more on autonomous driving, AI and robotics.

He will also be required to boost Tesla's market capitalization from around $1.3 trillion to a unprecedented $8.5 trillion. Top of the range U.S.-tech giants, Apple, Microsoft and NVIDIA, have market caps in the $2.6 to $3.2 trillion range.

Under the deal, meeting the required goals would boost his voting rights to between 25% and 29%, in line with previous statements that they would need to be around the 25% mark before he could consider taking on the job of diversifying Tesla into AI.

Wedbush's global head of tech research, Ted Ives, told CNBC that Musk's inside deal was "a huge sign of confidence for Tesla bulls and shows Musk is doubling down on his Tesla AI bet."

Musk also hopes to convince shareholders that Telsa should take his stake in his new "xAI" venture.