Elon Musk Is Buying Tesla Stock. Should You?

Key Points

• Musk disclosed a rare open-market buy of about $1 billion in Tesla shares.

• His recent commentary keeps pointing to autonomous driving and robotics as the long-term value drivers.

• Near-term business trends are mixed, and the stock's valuation remains demanding even after the pop.

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Tesla (NASDAQ: TSLA), the electric-vehicle maker that's rapidly positioning itself as an artificial intelligence (AI) and robotics company, jumped after CEO Elon Musk disclosed a large insider purchase. The move -- his first open-market buy in years -- reignited debate about whether the stock is attractive today or still priced for perfection.

The buy matters. Signals from founders and CEOs can be useful context. But the investment case ultimately rests on the company's financial trajectory, its prospects, and the price investors are asked to pay.

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Here's what changed with Musk's purchase, and how it stacks up against Tesla's fundamentals and valuation right now.

Image source: Getty Images.

Musk is back buying shares

A new regulatory filing shows Musk bought roughly 2.57 million shares on Sept. 12 at prices ranging from about $372 to $396, a total near $1 billion. Shares rose on the disclosure. It's his first open-market purchase since February 2020, when he bought about 13,000 shares in a company offering.

The timing is notable. After a tough first half of 2025 for electric vehicle (EV) demand and a year of intense focus on autonomous driving, Musk has repeatedly argued that a significant portion of the company's future market value depends on self-driving and robotics.

In the company's second-quarter update, management called the period "a seminal point in Tesla's history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services," and highlighted the company's initial rollout of its pilot robotaxi service in Austin, Texas. That context makes a billion-dollar insider buy an attention-grabbing vote of confidence.

It also follows Musk's public push to maintain significant voting control at Tesla as the company leans harder into artificial intelligence (AI). While investors will parse motives, the simplest takeaway is that the CEO just increased his personal exposure to the company's future, making it clear he is bullish.

The business and the price

The near-term picture is mixed. Vehicle deliveries fell year over year in the first and second quarters as price cuts and a model refresh worked through the system, while energy storage continued to scale up.

In the second quarter, Tesla reported total revenue of about $22.5 billion, down 12% year over year; operating income of about $900 million under generally accepted accounting principles (GAAP), and a 4.1% operating margin.

In the quarter, the company reported record trailing-12-month energy-storage deployments and $846 million of energy gross profit. These figures underscore the push to diversify profit drivers beyond cars.

And management's narrative continues to steer investors toward autonomous driving and robotics. The quarterly update emphasized the launch of a limited robotaxi service in Austin and reiterated plans for volume production of an autonomous vehicle (called the Cybercab) to start next year, along with aspirations to eventually sell humanoid robots. That road map may prove transformational if execution and regulation cooperate, but there's uncertainty regarding timing and monetization.

Valuation, meanwhile, still leaves little room for error. Using Tesla's own GAAP results, earnings per share over the last four reported quarters come to roughly $1.67. At about $420 per share after the disclosure-driven bounce, the stock trades near 250 times earnings. Even if investors prefer to look past a cyclical trough and toward optionality in autonomous driving and AI, that is a premium that assumes significant profit growth ahead.

There are risks investors should weigh alongside the upside narrative. Global EV demand has been choppy, pricing remains competitive, and new product ramp-ups -- whether the "new" Model Y, the Cybercab, or humanoid robots -- carry execution risk.

Any delay in scaling up autonomous driving or hurdles to regulatory approvals could push out expected cash flows that today's valuation seems to be baking in. On the flip side, energy storage is becoming a more meaningful contributor and may help smooth earnings while higher-margin software and services build. And it's always possible that demonstrations of improving self-driving software help increase demand for Teslas, driving the arrow on automotive profits sharply up and to the right.

So, should investors follow Musk and buy the growth stock today? His purchase is a strong signal and, paired with the company's steady progress in energy and autonomous driving, it adds confidence to the long-term story.

But a single insider buy doesn't erase the risks: At a price that implies very robust earnings power, the stock could prove unrewarding if profit growth merely tracks incremental improvements in vehicles, energy, and software rather than the step-function gains envisioned from robotaxis and robotics.

For investors comfortable following that path -- and the timing risk that comes with it -- Tesla remains a compelling long-term story. For investors who want a margin of safety grounded in current earnings, patience may be the smarter move until results catch up more with the share price.

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Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.