Tesla Inc (Nasdaq: TSLA) CEO Elon Musk has been criticized in recent months for lashing out at the media, Wall Street analysts and Tesla short sellers. However, Musk let his money do the talking this week.
A new filing on Wednesday afternoon revealed that Musk has purchased $24.9 million of TSLA stock this week at prices ranging from $342 to $347 per share. The new round of buying marks the second time in roughly a month that Musk has made a major personal investment in Tesla. In early May, Musk purchased approximately $10 million of TSLA stock at a price just below $300 per share.
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After his latest buying, Musk now has a roughly 19 percent ownership stake in Tesla, an investment that could pay off tremendously if the company delivers on Musk’s ambitious targets.
Investors cheered Musk’s invetsment, and Tesla stock traded higher by more than 1 percent on Thursday morning. Unfortunately for longer-term investors, Tesla shares are still down 7.3 percent over the past year after the company repeatedly failed to hit Model 3 production targets. Musk initially called for Tesla to hit a Model 3 production rate of 5,000 vehicles per week by the end of 2017, but he recently said Tesla will finally hit that target by the end of June.
Musk has also said Tesla will be profitable and cash-flow positive by the third quarter.
Earlier this week, Tesla announced it is cutting 9 percent of its workforce in an effort to trim costs. In an email, Musk told employees Tesla’s lack of profitability is a “valid and fair criticism of Tesla’s history to date.”
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Tesla reported a per-share loss of $3.35 and cash burn of $1.04 billion in the first quarter, and Bank of America analyst John Murphy says he still believes Tesla will have to raise additional capital this year. Murphy says Tesla could easily burn through at least another $1 billion in the second quarter and is projecting a $1 billion equity raise sometime in 2018.
“We view Tesla as a trailblazer in the electric vehicle market, and believe it could ultimately be successful as demand for EVs increases,” Murphy says. “However, Tesla continues to burn material levels of cash while failing to turn a corner on profits and returns.”
Bank of America has an “underperform” rating and $180 price target for TSLA stock.
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Elon Musk Now Owns 19 Percent of Tesla Inc (TSLA) Stock originally appeared on usnews.com
