Electric-car maker Tesla (NASDAQ:TSLA) 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.
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.