Tesla Overcomes 2025 Losses as Musk Buys $1B in Shares

Elon Musk's $1 Billion Investment in Tesla Sparks a Stock Comeback

Elon Musk recently made a bold move by investing $1 billion of his personal funds to purchase additional shares of Tesla, providing the struggling stock with a much-needed boost. This significant investment helped Tesla recover from its previous losses and turn positive for the year. The transaction, which took place on Friday and was disclosed in a filing on Monday, is an unusual move, especially for a CEO like Musk. It’s rare for business leaders to use their own money to buy company stock without exercising options, which typically allow them to purchase shares at a lower price.

The news had an immediate impact on Tesla's stock, which rose 7% at the market open on Monday. Although the gains didn’t last throughout the day, the stock still managed to close up nearly 4%. This increase was enough to erase the remaining losses for Tesla shares this year, which had previously dropped as much as 42% from the end of 2024.

Dan Ives, a tech analyst at Wedbush Securities, noted that Musk’s move is a strong signal of confidence in Tesla. He said, “It sends a positive signal after a very tumultuous year for Musk and Tesla shareholders.” Ives is one of the more prominent supporters of Tesla on Wall Street.

Musk’s ability to spend $1 billion on Tesla stock highlights his immense wealth. For him, the cost is negligible, and in fact, the stock’s rise on Monday added approximately $5.8 billion to his net worth, effectively covering the cost of the purchase.

A Rollercoaster Year for Tesla Shares

Tesla’s stock has experienced a wild ride over the past year. After the election, shares nearly doubled as investors speculated that Musk’s connections with then-President-elect Donald Trump would benefit the company, especially regarding its self-driving car and robotaxi initiatives. However, after reaching a record high in mid-December, the stock began to decline sharply.

As Musk became more involved in the Trump administration’s Department of Government Efficiency, Tesla faced backlash from critics of Trump and his policies. This led to some of the company’s worst sales drops in history during the first and second quarters, with profits also declining significantly.

In addition to political challenges, Tesla faces increasing competition from other automakers, particularly in China. Chinese automaker BYD is expected to surpass Tesla as the world’s largest EV manufacturer, despite not having a presence in the U.S. market.

Another challenge for Tesla is the impending expiration of the $7,500 tax credit for U.S. EV buyers at the end of the month. While this may boost third-quarter sales, the company is likely to see a drop in sales for the rest of the year.

Musk also had a falling out with Trump, leading him to leave his role in the administration and return to Tesla. Despite these challenges, Tesla shares have started to recover from their earlier lows.

Future Prospects and Pay Package

Musk remains focused on Tesla’s future, particularly its self-driving technology and robotaxi plans. Last week, Tesla proposed a new pay package for Musk that could grant him stock options worth up to $1 trillion if certain sales and valuation milestones are met. However, Musk will only receive additional shares and income if Tesla’s stock increases by more than 50%, reaching a market cap of $2 trillion. Currently, the company is valued at $1.3 trillion.

Tesla’s board emphasized the importance of keeping Musk focused on the company in its proxy statement. Musk is also the CEO of SpaceX and xAI, the company that owns X (formerly Twitter), which he purchased for $44 billion in 2022. In addition to his business ventures, Musk remains active in politics, despite his split with Trump. He has announced plans to form a third political party, though details remain unclear.

Musk continues to face criticism for his political views, social media posts, and his vast wealth. Pope Leo XIV recently commented on Musk’s proposed pay package, highlighting concerns about income inequality and societal polarization.

Musk's Stake in Tesla and Future Plans

Monday’s stock purchase added 2.6 million Tesla shares to Musk’s portfolio, but it barely increased his stake in the company. His holdings of Tesla shares rose by less than 1%, bringing his total ownership to 12.8% of the company’s shares.

Musk has expressed a desire to control at least 25% of Tesla, stating that he wants enough voting power to be influential but not so much that he can't be overturned. He has warned that he may shift some AI efforts away from Tesla to xAI if he doesn’t gain more control.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” Musk wrote in a post on X in January 2024. “Unless that is the case, I would prefer to build products outside of Tesla.”