Please ensure Javascript is enabled for purposes of website accessibility

Elon Musk Loads Up on More Tesla Stock

By Daniel Sparks – Updated May 7, 2019 at 4:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The CEO just bought more than 100,000 shares.

Electric-car maker Tesla (TSLA -4.59%) announced last week that it would raise as much as $2.7 billion in an offering of debt and equity -- and Tesla CEO Elon Musk notably expressed interest in buying some of the new shares. Now a new SEC filing shows he followed through, loading up on the maximum amount of shares he said he was interested in buying.

The CEO's move to buy shares comes as the stock is trading significantly lower than the last time he did so. This purchase, combined with Musk's decision to hold on to his massive stake through the stock's tumultuous run in recent years, highlights the CEO's confidence in the company's long-term prospects.

Tesla Model 3 interior

Model 3. Image source: Tesla.

102,880 shares

When Tesla first announced an equity and debt offering last week, Musk initially disclosed an interest in buying up to $10 million of Tesla stock. But the CEO updated his stance the next day, saying he was considering purchasing up to $25 million worth of stock.

Musk put his money where his mouth is. An SEC filing published on Tesla's website on Monday revealed he bought 102,880 shares at a price of $243, or $25 million worth.

The CEO is getting shares at a discount compared to the prices he paid for the stock last year. As Barron's points out, Musk bought nearly $45 million worth of Tesla stock on the open market last year, paying an average price of $331.

Buying and holding...forever

While there may be reasons to be critical when it comes to Musk's leadership tactics, his commitment to being a long-term shareholder is not one of them.

Not only does the CEO have a near-20% stake in the company, he also has sold shares only to fulfill tax obligations. And Musk has publicly committed to being the last one to cash out, telling an audience in Germany in late 2013, "I will be the last one to sell shares."

Of course, there's no guarantee Musk will keep his public commitment to hold on to his stake. In addition, he will likely continue to occasionally sell shares to fulfill tax obligations or, perhaps, participate in charitable giving. But given his unwavering commitment to remaining a major Tesla shareholder so far, combined with his new $25 million purchase of Tesla stock, it's unlikely Musk has any plans to sell.

Tesla shareholders may have had a rough run over the past year, with shares declining 15% as the S&P 500 index has risen 8%. But they can comfort themselves with the knowledge that Musk's massive stake has similarly taken a hit. Further, with nearly a fifth of the company owned by Musk, you can bet he has a vested interest in trying to create long-term value so that the stock can eventually turn upward.

Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$275.33 (-4.59%) $-13.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.