Why buy $1 billion (€850 million) of stock in a company you already control? Some view it as a show of faith in the business. Others see a chief executive’s ego in action.
Veteran short-seller Jim Chanos is in the latter camp. “If you don’t think Oracle’s recent stock move had something to do with Elon’s Tesla purchase, then you don’t know Silicon Valley CEOs,” he quipped, referring to how Musk’s $1 billion stock purchase came just after Larry Ellison briefly supplanted him as the world’s richest person.
Happily for Musk, his first insider purchase since 2020 drove Tesla shares higher, and his old friend Ellison is once again trailing in second place.
In contrast, Tesla/Musk enthusiasts take it as proof the boss is fully focused on Tesla, that “Daddy is very much home”, as Musk himself put it.
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Still, Musk has form in ego contests. In 2021 he mocked Jeff Bezos by promising to send him a silver medal and a “giant statue of the digit 2” after Musk first topped the world’s rich list.
Ego aside, research suggests chief executives often buy stock for reasons other than profit (for example, it makes them harder to be fired).
In Musk’s case, his purchase checks another box: getting shareholders on board for his proposed trillion-dollar-plus pay package.
Chanos suggests Musk cannot stand the view from number two, but perhaps it is less vanity than strategy: a $1 billion nudge regarding a $1 trillion bonus.
