A week after Tesla Inc. proposed an unprecedented pay package that would make CEO Elon Musk the world’s first trillionaire, he responded by buying about $1 billion worth of shares, sending the company’s stock price soaring early Monday.
Shares of the electric vehicle maker jumped as much as 9% before slipping back to close up less than 4%. The stock is now up 1.5% for the year to date, having recovered from a 45% decline as of early April.
According to a regulatory filing Monday, Musk purchased various amounts of shares at different prices Friday through a revocable trust. The purchases, which totaled more than 2.5 million shares, were viewed by the markets as the billionaire remaining confident in the Austin company’s future.
The move and rising stock price also moved him closer to meeting at least one of the goals set out by the Tesla board in the proposed pay package, which represents a new level of outsize pay in a country already known for extreme compensation. But the payoff is in shares, not cash, and the goals are extreme as well.
Among other benchmarks, his receipt of shares worth as much as 12% of the company in a dozen separate packages is predicated on Musk’s ability to persuade investors the company is worth $2 trillion in total, roughly double its current value. To receive all the shares offered would require that market value to then rise to $8.5 trillion, double that of the world’s most valuable company now, chipmaker Nvidia.
It could be a tall order. Tesla has also seen a plunge in sales this year, largely due to blowback over Musk’s affiliation with President Donald Trump. It’s also been hit by customer boredom with its aging lineup of vehicles, concerns over the abilities of its so-called self-driving software and intensifying competition from the big Detroit automakers and, particularly, from China.
Investors had grown increasingly worried about the trajectory of the company after Musk spent so much time in Washington this year, becoming one of the most prominent officials in the Trump administration in its bid to slash the size of the U.S. government. He left in part due to pressure from the Tesla board and investors to get him to spend more time on his companies.
While Musk has talked up Tesla’s pursuit of robotaxis and humanoid robots, he’s also cautioned that the company could be in for “a few rough quarters” after the Trump administration phases out EV purchase incentives at the end of this month.
Tesla’s car business has continued to show signs of strain, with market researcher Cox Automotive estimating its share of the U.S. electric vehicle market slipped below 40% last month. Registrations also kept slumping last month in major markets across Europe and vehicle shipments from the company’s Shanghai factory dropped in both July and August.
Musk, 54, last bought Tesla stock on the open market in February 2020, according to data compiled by Bloomberg. He dumped shares worth more than $20 billion in 2022, the year he acquired Twitter.
