Elon Musk’s $1B Tesla investment and the outlook for Tesla stock

Elon Musk’s $1 billion purchase of Tesla shares has lifted confidence in the stock and pushed it back into positive territory for 2025. The buy, disclosed on 15 September, marked Musk’s first open-market purchase since 2020 and his largest insider acquisition by value. 

Data showed Tesla shares surged as much as 8% intraday, briefly topping $425 before closing at $410, reversing earlier year-to-date losses and putting the stock up 1.5% for the year. The key question now is whether this rally extends towards $500 or proves to be a temporary bounce in a volatile year for the company.

Key takeaways

• Musk bought 2.57 million shares worth $1B on 12 September through a revocable trust.
  
  
• Tesla’s stock rose 3.6% on 15 September, closing at $410.04 and flipping positive for 2025.
  
  
• Musk’s net worth increased by $5.8B in one day, more than offsetting the cost.
  
  
• Tesla faces weakening EV demand, intense competition, and political overhangs.
  
  
• A $1T pay package proposal could lift Musk’s stake to ~25% if performance goals are hit.
  
  

Why Elon Musk's Tesla purchase matters

Analysts say insider buying of this size is unusual, particularly for a CEO who already controls a double-digit stake. Musk previously relied on exercising stock options for new shares, but this direct outlay of personal wealth is interpreted as a strong signal of confidence. Prior to the purchase, Musk owned about 13% of Tesla. The additional 2.57 million shares raise his stake only marginally, but act as a powerful vote of confidence at a time when Tesla’s fundamentals are under pressure.

It also underscores Musk’s personal wealth advantage. While most CEOs are reluctant to spend billions on stock, Musk’s fortune allows him to make such moves without financial strain. The fact that the market reaction added $5.8 billion to his net worth in a single day highlights how symbolic this $1B move was.

Market reaction on Tesla stocks and stock performance

Tesla’s stock had endured a volatile 2025. Shares hit lows near $222 in March, down more than 40% from the start of the year, as sales slowed and investors worried about shrinking margins. 

The rally in recent months brought Tesla back into recovery mode, up 25% over the last three months, even before Musk’s buy.

The 15 September surge was notable: Tesla hit $425 intraday, its highest since January 2025, before closing at $410.04. That session erased the company’s year-to-date losses, flipping Tesla into positive territory for 2025 with a 1.5% gain by Monday’s close.

Options traders had positioned heavily ahead of the news. Short-term call options tied to Tesla surged as much as 1,000% in value, raising questions about whether some investors anticipated the disclosure. The sudden spike in speculative activity reinforced the sense that Musk’s action injected short-term momentum into an already volatile stock.

The bull case: AI, autonomy, and Musk’s influence

For bullish investors, Musk’s $1B purchase confirms his commitment to Tesla’s next phase - transforming from a carmaker to a technology company. The roadmap centres on:

• Full Self-Driving (FSD) software deployment.
  
  
• Robotaxi network ambitions to monetise autonomy at scale.
  
  
• Optimus humanoid robot development.
  
  
• Energy storage expansion.
  
  

Bulls argue that these innovations, if realised, could justify higher valuations and shift Tesla into categories far beyond automotive. Analyst Dan Ives of Wedbush has described Musk’s actions as critical to maintaining Tesla’s leadership in AI and autonomy. The fact that the stock rebounded into positive territory for the year on the back of Musk’s buy supports the view that investor psychology still leans heavily on Musk’s personal involvement.

The bear case: EV slowdown, competition, and political risk

Despite the rally, headwinds remain significant. Tesla’s global sales are expected to fall further in Q4 2025 with the expiry of the $7,500 U.S. EV tax credit at the end of September. Margins have been under pressure, with Q2 results showing rising costs and shrinking profitability.

Competition is intensifying. Chinese automaker BYD is set to surpass Tesla as the world’s largest EV producer, despite its vehicles not being sold in the U.S. Meanwhile, legacy automakers in Detroit are expanding their electric lineups, putting pressure on Tesla’s pricing power.

Musk’s political activities add another layer of risk. His brief tenure running the Trump administration’s Department of Government Efficiency and subsequent fallout with the White House have polarised Tesla’s consumer base. His divisive social media posts and anti-immigration rhetoric have also drawn backlash, potentially harming Tesla’s brand appeal in key markets.

Tesla's market cap and Musk’s $1T compensation package

The $1B purchase comes as Tesla’s board pushes for an unprecedented compensation package for Musk, worth up to $1 trillion in stock awards over the next decade. The plan would award up to 423 million shares (~12% of Tesla) in 12 tranches tied to performance milestones:

• Reaching an $8.5T market cap.
  
  
• Delivering 20M vehicles annually.
  
  
• Deploying 1M robotaxis and Optimus robots.
  
  
• Generating $400B in EBITDA.
  
  

The first tranche unlocks at a $2T market cap combined with 20M vehicles delivered. If fully achieved, Musk’s ownership could approach 25%, significantly increasing his voting power - a key demand he has made in steering Tesla toward AI and robotics.

This proposal comes after a Delaware court struck down Musk’s prior $56B pay package in 2024, a ruling now under appeal. Shareholders will vote on the new package on 6 November 2025, alongside a proposal for Tesla to invest in Musk’s AI startup, xAI.

Tesla Market outlook: $500 or renewed volatility?

Tesla’s path forward will hinge on execution. A run towards $500 would require continued momentum in autonomy and AI projects, coupled with stabilised EV sales. Investor enthusiasm may carry the stock higher in the short term, but execution risks loom large: softening demand, competitive pricing wars, and reputational damage from Musk’s political controversies.

The options market and speculative behaviour point to elevated volatility, with traders quick to position for either upside breakouts or sharp pullbacks. Tesla remains one of the most sentiment-driven stocks on Wall Street - and Musk’s moves directly amplify that volatility.

Tesla technical insight

At the time of writing, Tesla is seeing some slowdown after a significant Musk-inspired rally. Dominant buy pressure is evident on the daily chart and on the volume bars, with sellers not pushing back with enough conviction. Should we see a dip, prices could test the $347.00 support level. Further support floors lie on the $330.00 and $300.00 price levels.

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Tesla stocks Investment implications

For investors, Musk’s $1B purchase acts as a near-term catalyst but does not resolve Tesla’s structural risks. The stock now sits at a pivotal level near $410–$425. Sustained progress in AI and autonomy could drive momentum towards $500, but weaker demand or renewed political backlash could spark another downturn. Tesla remains a high-risk, high-reward investment, with performance tightly bound to Musk’s ability to deliver on ambitious milestones in an increasingly competitive EV and technology landscape.