Tesla Stock Soars as Elon Musk Reveals $1 Billion Stock Buy

• Tesla (TSLA) shares rose 7.81% to $425.67 in premarket trading following CEO Elon Musk’s purchase of 2.57 million shares for about $1 billion, marking his first open-market buy since February 2020 and his largest by value.
• Despite a slight year-to-date decline, the stock has rallied over 25% in the last three months, amid analyst divisions with a consensus price target implying a 20% drop, though long-term optimism centers on autonomous driving, AI, and robotics.
• Shareholders will vote in November on a new pay package for Musk potentially worth $975 billion, tied to milestones like an $8.5 trillion market cap, alongside a proposal for Tesla to invest in Musk’s xAI, against a backdrop of slumping sales influenced by brand perceptions and discontinued EV incentives.

Tesla (TSLA) shares surged in premarket trading, climbing 7.81% to $425.67 after finishing the previous session at $395.94, reflecting strong market enthusiasm for CEO Elon Musk’s substantial insider buy. This move, involving 2.57 million shares acquired at a total cost of approximately $1 billion, marks Musk’s first open-market purchase since February 2020 and stands as his largest ever by value, underscoring a profound commitment to the company’s trajectory amid ongoing challenges.

The acquisition boosted premarket gains to 8%, even as the stock had dipped slightly for the year despite a robust 25% rise over the past three months. Prior to this transaction, Musk held about 13% of Tesla, a stake that has long positioned him as a pivotal figure in the electric vehicle giant’s direction. Such insider activity is uncommon for Musk, with his last comparable buy occurring on February 14, 2020, when he added 200,000 shares for roughly $10 million.

Wall Street remains divided on Tesla’s outlook, with the average price target suggesting a potential 20% drop from current levels. However, optimism persists among some analysts regarding the company’s pivot toward autonomous driving, artificial intelligence, and robotics, areas where Tesla has invested heavily in recent years through initiatives like its Full Self-Driving software and Optimus humanoid robot project. Dan Ives of Wedbush described the purchase as a major endorsement for Tesla’s AI ambitions, signaling Musk’s intent to intensify focus in these domains.

Compounding this momentum, Tesla recently proposed a new compensation plan for Musk, potentially valued at up to $975 billion if aggressive milestones are met, including a staggering $8.5 trillion market capitalization – far exceeding the $1.28 trillion valuation at the prior close. Shareholders are set to vote on this package in November, alongside a proposal for Tesla to invest in Musk’s xAI venture, which aims to advance AI technologies that could synergize with Tesla’s ecosystem.

Despite these forward-looking elements, Tesla has faced headwinds this year from declining sales, influenced by brand perceptions tied to Musk’s political engagements and the discontinuation of certain electric vehicle incentives under the Trump administration. These factors have tempered short-term sentiment, yet Musk’s recent actions appear designed to rally investors around the company’s long-term vision in transformative technologies.

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