As investors were holding their breath ahead of earnings from Tesla Motors Inc (NASDAQ:TSLA), CEO Elon Musk attempted to quell concerns by buying up shares of the company as a vote of confidence. As much as the influential CEO touts the stock, investors could not help but notice that shares plummeted 20 percent in the month of January.
Investors got the reassurance they needed after Musk made headlines at the end of January by buying up $100 million of Tesla shares. Musk exercised over 500K stock options for an exercise price of $6.63; not a bad deal considering shares were trading at approximately $190 per share. Sources say Musk even absorbed the cost of the tax; a $50 million price tag; by paying it out of pocket instead of selling shares to cover the cost.
However, Musk did not stop there. On February 8, he bought up an additional 676K stock options for the same exercise price of $6.63, bringing his total Tesla holdings to 29.5 million shares.
In the past, Musk has proved to be a savvy investor of his own companies. When making investments in Tesla and SolarCity, Musk has an average one-year return of 140% per transaction.
Investors were nervous going into earnings. The company lowered its delivery guidance throughout 2015 as it realized that production capabilities were not up to speed. Analysts also had not forgotten than Tesla has consistently posted wider losses per share, quarter after quarter. After all the hype, Tesla reported earnings on February 10. Ultimately, the company posted disappointing earnings, announcing adjusted loss per share of ($0.87) compared to estimates of $0.10, and revenue of $1.75 billion compared to estimates of $1.81 billion.
However, the stock rallied on promising guidance. The latest earnings report highlighted that Tesla plans to “generate positive net cash flow and achieve non-GAAP profitability for the full-year 2016.” The company has lofty goals to deliver between 80K and 90K new Model S and Model X cars in 2016. To kick off the deliveries, Tesla is starting with a goal of 16K deliveries in Q1, which would mark a 60% year-over-year increase.
Despite Musk’s massive investment in his own company, analysts don’t seem to be quite convinced. According to TipRanks, 5 analysts recommend buying the stock, 3 recommend selling it, and 5 remain neutral. The average 12-month price target between these 13 analyst sis $253.45, marking a 67% potential upside from current levels.