Tesla Motors Inc CEO Elon Musk gave investors one more reason to feel encouraged just days before its Q4 and full-year earnings. Musk raised his personal stake in the EV firm by another $100m shares. Such a move can be viewed as a positive statement by Musk and one that could serve to buoy investor confidence.
Boosting investors’ confidence in Tesla
It must be noted that Musk did not buy the stock in open market, instead, he converted his 532,000 stock options, acquiring the stock at $6.63. This is a very good deal for Musk as Tesla shares are currently trading around $192.
With this purchase, Mush now holds around 22% in Tesla Motors Inc . Apart from Musk, other big holders are Fidelity Investments, which holds around 10% in the EV firm. The Mutual fund giant once held almost 15% stake in the firm, but lowered their stake in 2013.
Buying or selling of a stock by an insider provides a hint to the investors over the firms growth prospects. When executives believe a firm to do well, they buy the stock, and when they do not agree with the point of view, they sell. Therefore Musk’s latest move – its timing and the volume – will surely push up investors confidence in Tesla.
Musk’s transaction was revealed by the firm in a filing with the SEC on Friday. The EV firm will come up with its earnings report on Wednesday, February 10.
Musk’s intentions – hard to tell
Along with boosting investors confidence, the move may also fuel speculations as weeks before and after a firms earnings are generally seen as sensitive times, where executives lay low rather than making “making bold, brash moves or statements,” says a report from Mashable.
Even Regulation Fair Disclosure discourage public firms against talking “to analysts or investors during that time, lest they tip off anyone to the financial performance to come,” the report says.
Thus, a stock purchase, can raise questions that the CEO bought the stock as he or she was aware that the upcoming earnings report from the firm will be positive. On the other hand, it could also hint that the earnings are not as good, and the executives “wants to shore up confidence before rumors start circulating,” the report says.
Nevertheless, reading Musk’s intentions behind this move is something hard to tell. He is an avid believer in Tesla, and at the same time, he is a smart businessman, who knows how to make money.
Tesla’s stock is not very far from its lowest point of $186 share. On Friday, Tesla Motors Inc shares closed up 0.79% at $191.20. Year to date, the stock is down over 20% while in the last one-year, it is down over 6%. The stock has a 52-week high of $286.65.