Tesla stock rises after Elon Musk buys more than 2.5m shares worth about £740m

Tesla’s stock climbed on Monday after chief executive Elon Musk disclosed the purchase of more than 2.5 million shares worth approximately a billion dollars (£740 million).

Shares of the electric vehicle maker rose more than 5% in morning trading.

Mr Musk purchased various amounts of shares at different prices on Friday, according to a regulatory filing. The move may be viewed by the markets as the billionaire remaining confident in the company’s future.

Earlier this month Tesla released a proposed pay package for Mr Musk that could make him the world’s first trillionaire if he hits a series of aggressive targets for the company over the next decade.

Tesla said in a regulatory filing that it will hand him shares worth as much as 12% of the company in a dozen separate packages if the company meets certain performance targets, including massive increases in car production, share price and operating profit.

If approved by shareholders, the new pay package could make Mr Musk the world’s first trillion-dollar executive, and would mark a new level of pay in a country already known for extreme compensation. But the payoff is in shares, not cash, and the goals are extreme as well.

To get his first package of shares, equivalent to 1% of the company, he would have to convince investors in the stock market that Tesla is worth 2 trillion dollars (£1.4 trillion) in total, double what they value it today, and also hit several other milestones.

To receive all the shares offered and make him the world’s first trillion-dollar man would require that market value to rise to 8.5 trillion dollars (£6.2 trillion), double that of the world’s most valuable company now, chipmaker Nvidia.

Tesla has seen a plunge in sales this year, largely due to a backlash over Mr Musk’s affiliation with President Donald Trump. Tesla also faces intensifying competition from the big Detroit car makers and particularly from China.

Investors have become increasingly worried about the trajectory of the company after Mr Musk spent so much time in Washington this year, becoming one of the most prominent officials in the Trump administration in its bid to slash the size of the US government.

Tesla is set to hold its annual shareholders meeting on November 6, when investors will vote on the new pay package.