No doubt, Elon Musk is one of the best businessmen on Earth.
Musk was one of the early players in PayPal. In 2002, eBay acquired the payment service for $1.5 billion, netting Musk a $165-million windfall. He then parlayed his profits into several new ventures, including SpaceX, SolarCity, and OpenAI.
Because of his track record, I always watch what Elon Musk is doing. And right now, he’s making a big bet on another tech stock.
Elon Musk Bought $100 Million of This Tech Giant
Elon Musk is worried about manmade climate change. Likely for this reason, he has poured millions of dollars into clean power and transit projects. Even Musk’s attempt to land a spacecraft on Mars is a backdoor plan to save humanity if things turn south on Earth.
He is also doubling down on other projects. Last week, Musk exercised the right to buy 532,000 shares of Tesla Motors Inc (NASDAQ:TSLA). Based on Friday’s closing price, the transaction is worth approximately $100 million. (Source: “Elon Musk Form 4 Filing,” Securities and Exchange Commission web site, last accessed February 1, 2016.)
“Elon did not sell any shares even though he had to pay more than $50.0 million of taxes in connection with the exercise,” according to a statement from a Tesla spokesperson. “Instead of selling, he used cash to pay both the taxes and the exercise price.” (Source: “Elon Musk now owns 1/5th of Tesla Motors,” Autoblog, January 30, 2016.)
Elon Musk is putting his money where his mouth is. The tech visionary is often celebrated for an unwavering belief in his companies. His attitude is in contrast to most executives, who often have no stakes in the companies they run.
Musk’s purchase is also a big vote of confidence. The company is due to report fourth-quarter earnings on February 10. Tesla is also expected to unveil its entry level “Model 3” in March.
And Musk isn’t the only investor bullish on the stock. Other money managers including Ken Griffin and Mike Masters own large stakes in the company. Andor Capital Management head Daniel Benton has built a $248.4-million position in Tesla stock. (Source: “What Do Hedge Funds Think of Tesla Motors Inc,” Insider Monkey, December 1, 2015.)
What could all these Wall Street titans see in Tesla? I’d say it could mean only one thing: they see an epic rally ahead.