Fire column soars after Musk's purchase, Tesla at highest in 8 months

News that Elon Musk, Tesla's chief executive officer (CEO), bought Tesla shares led the Tesla share price to rise sharply. It recovered to the $400 range for the first time in eight months since last January.

On the 15th (local time) in the New York market, Tesla closed at $410.26, up 3.62% from the previous session. At one point during trading it rose to $425.70 (7.52%↑) before gradually reducing gains and finishing in the $410 range.

That closing price was the highest since the close of $412.38 on January 23. It is also the first time above $400 in about eight months since $404.60 on January 31. Tesla's share price has risen for five consecutive trading days after closing at $346.40 on the 8th.

The surge in Tesla's share price is attributed to Musk's large-scale purchase of Tesla shares. Bloomberg News and the business network CNBC reported, based on regulatory filings made public that day, that Musk bought $1 billion worth of Tesla shares on the 12th. This is the first time in five years and seven months that Musk has publicly bought Tesla shares since purchasing 200,000 shares (about $10 million) on February 14, 2020. CNBC added, "By amount, it is the largest ever."

After news of Musk's Tesla share purchase became known, the stock price surged. Musk posted a chart image on the social networking service (SNS) X·formerly Twitter showing Tesla's recent one-week price gain and wrote, "As predicted, Tesla went up $69 (in a week) to $420."

Dan Ives, head of global technology research at Wedbush Securities and a leading Tesla bull on Wall Street, said Musk's stock purchase is "a tremendous vote of confidence for Tesla bulls and shows that Musk is strengthening his bet on Tesla AI (artificial intelligence)."

Dmitri Sliapnikov, an analyst at Horizon Investments, said it is "an optimistic signal for those who believe Tesla's Optimus robots could be deployed en masse soon." There is also an interpretation that it is Musk's response to the astronomical CEO performance compensation plan prepared by Tesla's board.

Tesla's board will put the CEO compensation plan to a vote at the annual shareholder meeting on November 6, which would award Musk a total of $1 trillion (about 1,390 trillion won) in Tesla shares over 10 years in 12 tranches through 2035. For Musk to receive all of this compensation, he must first achieve a Tesla market capitalization of $2 trillion and then meet stepwise targets to ultimately raise Tesla's market cap to $8.5 trillion.

As of that closing price, Tesla's market capitalization was about 1.3 trillion won. Tesla's all-time high share price on a closing basis was $479.86 recorded on December 17 last year. At that time, the market capitalization was about $1.5404 trillion.

There are also concerns. Bloomberg pointed out that Tesla's stock was trading at about 186 times expected earnings over the next 12 months, compared with an average of 23 times for S&P 500 companies, a large difference. CFRA analyst Garrett Nelson analyzed, "The gap between Tesla's stock price and our expected earnings estimates is getting larger," and said, "Many investors are continuing to take a generous view of the company from a long-term perspective despite significant short-term headwinds."

So-yeon Kim, Hankyung.com reporter sue123@hankyung.com