This article first appeared on GuruFocus.
Sep 15 – A major insider move put Tesla (NASDAQ:TSLA) in the spotlight after Elon Musk disclosed a purchase of more than $1 billion worth of company shares. An SEC filing showed Musk bought 2,568,732 shares on September 12 at prices ranging from $371.38 to $396.54 per share. The total cost of the purchase was about $999.96 million. Following the transaction, Musk now owns 509,362,808 Tesla shares.
The move pushed Tesla stock higher, climbing 7% on Friday and another 8% in premarket trading on Monday to $419.50. The stock now trades near levels last seen in mid-January. Investors often read insider buying as a sign of confidence, though the purchase represents less than 0.1% of Tesla’s total shares outstanding.
Alongside the stock purchase, Tesla’s board granted Musk a performance-based compensation plan that could be worth up to $1 trillion if all 12 milestones are met. The package requires him to remain CEO for at least 7.5 years, with shareholders set to vote on the proposal at the company’s annual meeting on November 6.
The combination of a large insider buy and an ambitious pay plan highlights both Tesla’s growth ambitions and the high bar management must clear to deliver long-term shareholder value.
