Tesla Extends Gains After Musk Buy: Can the Momentum Hold?
In a move that has reignited investor enthusiasm for the electric vehicle giant, $Tesla Motors(TSLA)$
This isn't just a symbolic gesture; it's a substantial commitment. Musk acquired the shares at prices ranging from $371 to $396 per share, according to the SEC filing. For context, his last purchase in 2020 involved just 13,000 shares worth about $10 million. The scale of this latest buy underscores Musk's alignment with shareholders amid Tesla's turbulent 2025 performance.
Tesla's board, led by Chair Robyn Denholm, has been vocal in defending Musk, with Denholm recently calling him a "generational leader" in an interview with Bloomberg, emphasizing that Musk is the right CEO during this "transformative period of time" for Tesla.
Musk's Bold Bet: A Strategic Stake for Control and Growth
Musk's acquisition stands out not just for its scale but for its timing and intent. Unlike his 2020 buy, which was symbolic, this $1 billion infusion—funded from personal resources—directly counters recent concerns over executive commitment amid Tesla's valuation pressures and EV market slowdowns. Analysts at Wedbush Securities, including Dan Ives, describe it as a "huge confidence vote" in Tesla's AI-driven future, particularly the robotaxi initiative, which Musk has touted as a potential multi-trillion-dollar opportunity. The purchase aligns with Musk's long-stated goal of owning at least 20-25% of the company to safeguard against activist investors or hostile takeovers during its transformation into an AI and robotics powerhouse.
Tesla’s rally has technically broken out of an ascending triangle pattern, pushing the stock above key resistance levels. However, some skeptics, like those at Seeking Alpha, caution that the jump may be "irrational" given persistent sales headwinds and a lofty forward P/E ratio exceeding 100x, urging investors to "sell the rally."
Regulatory Milestone: Nevada Greenlights Robotaxi Testing
Bolstering the momentum, Tesla secured approval from the Nevada Department of Motor Vehicles (DMV) around September 10 to test autonomous vehicles on public roads, a critical step toward commercializing its Robotaxi service. This permit allows Tesla to deploy test vehicles with red plates in the state, where regulations are among the most progressive for self-driving tech—home to competitors like Motional and Zoox. The news drove a 6% stock gain last Thursday, with Friday's confirmation from state officials amplifying the upside.
Musk has emphasized that Robotaxi and the Optimus humanoid robot could account for 80% of Tesla's long-term value, with pilots already underway in Texas and plans for expansion to California, Florida, and Arizona. Nevada's endorsement provides a key foothold, enabling data collection on safety metrics like miles driven and intervention rates. Yet, commercialization remains distant: Full paid operations require additional approvals and proven safety thresholds, underscoring the high bar for turning hype into revenue.
China Surge: Model Y L Fuels Demand Revival
Tesla's China strategy is delivering tangible wins, with the launch of the extended-wheelbase, six-seat Model Y L SUV proving a hit. Priced at about 339,000 yuan ($47,000)—a 2.5% premium over the standard Model Y—the family-oriented variant saw over 35,000 orders on launch day, with daily averages holding at 10,000 since. Cumulative bookings have surpassed 100,000, filling production slots through October and pushing new deliveries to November.
This success is vital in the world's largest EV market, where Tesla faces intensifying competition from BYD, Xiaomi's YU7, and others amid price wars. The Model Y L's customization for Chinese preferences—longer body, captain's chairs—demonstrates Tesla's adaptability, potentially boosting quarterly volumes and market share. Coupled with the rollout of next-gen energy storage products like Megapack 3 and Megablock systems, which promise faster installation and lower costs, these developments are seen as underappreciated drivers of near-term growth. Analysts predict this could catalyze a broader rebound, especially as Tesla's Shanghai Gigafactory ramps up.
The $1 Trillion Pay Package: Tying Musk to Ambitious Milestones
In a parallel development, Tesla's board has proposed a landmark 10-year compensation plan for Musk, potentially worth $1 trillion if all targets are met—eclipsing any U.S. executive package in history. Shareholder vote is slated for November, with the structure granting up to 12% additional equity tied to 12 performance milestones. These span market cap growth from $2 trillion to $8.5 trillion (current: ~$1.3 trillion), 20 million vehicle deliveries, 10 million Full Self-Driving (FSD) subscriptions, deployment of 1 million Optimus robots, and 1 million Robotaxis.
The package also mandates adjusted EBITDA of $400 billion annually across multiple quarters—a steep climb from 2024's projected $17 billion—and includes clauses for adjustments in major acquisitions, hinting at synergies with Musk's xAI. Board Chair Robyn Denholm emphasized Musk's irreplaceable role in AI and robotics over the next decade, with built-in succession planning. Firms like Morgan Stanley hail it as a "good deal" for shareholders, aligning Musk's incentives with exponential value creation, though critics at Morningstar flag dilution risks and governance red flags.
Recent updates include Musk's announcement of an AI5 chip review this weekend and a key meeting next week on AI/autonomous systems, Optimus production, and vehicle output—further fueling optimism around execution.
Outlook and Risks: A Third Act in the Making?
Tesla's history features two epic rallies: a 603% surge in 2013-2014 on Model S success and profitability, and a 2,368% explosion from 2019-2021 amid China expansion, S&P 500 inclusion, and EV mania. With shares now flirting with 2025 highs, bulls like those at Motley Fool foresee a 75% upside over the next 15 months if Robotaxi launches successfully, potentially valuing Tesla at $2.5 trillion or more. Morgan Stanley's Adam Jonas, fresh from FSD road tests, asserts the tech is "nearing real-world deployment."
That said, risks loom large. Autonomous driving faces regulatory scrutiny and safety hurdles; a single incident could derail timelines. China's cutthroat competition erodes margins, while the pay package's approval could dilute existing shares by double digits. Broader EV demand softness and macroeconomic headwinds add caution.
For investors, Tesla remains a high-conviction play on AI and autonomy, but one demanding patience. Core holders might average in on dips, eyeing calls or LEAPs for leveraged exposure to Robotaxi catalysts. As Musk shifts from seller to buyer, the narrative has flipped—watch November's vote and Q3 deliveries for confirmation that this rally has legs. In a market rewarding bold vision, Tesla's "third act" could redefine mobility, but only if execution matches ambition.
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it means tesla most likely will hit $850.00-$950.00 before year end