Is Elon’s Insider Buying a Bullish Signal for Overbought Tesla Stock, or More Noise?

Right on the heels of his newly secured compensation package – worth up to $1 trillion – Tesla (TSLA) CEO Elon Musk felt inspired to make his first purchase of company stock in about five years, according to an SEC filing. Musk bought 2.568 million shares of TSLA on Friday, Sept. 12, at prices ranging between $371.38 to $396.54 for a total spend of about $1 billion.

Notably, shareholders still need to vote on the new pay plan for Musk, which could raise questions around the motivations behind this TSLA stock purchase – the CEO’s first insider buy since February 2020, according to public records. In this analysis, Barchart contributor Jim Osman explains how investors can find the highest-conviction insider buying signals.

TSLA stock is surging this morning on the news, and peaked around $425 intraday. Now up 96% from their April lows, the shares are looking pretty overextended above their upper Bollinger Band, with the 14-day Relative Strength Index (RSI) hitting its most overbought reading of the year at 79.47.

Wedbush Securities analyst Dan Ives reiterated an “Outperform” rating and a $500 price target on TSLA today, writing, “We believe Tesla and Musk are heading into a very important chapter of their growth story as the AI Revolution takes hold and the Robotaxi opportunity is now a reality on the doorstep. We estimate the AI and autonomous opportunity is worth at least $1 trillion alone for Tesla.”

Ives, who has TSLA as a top 10 holding in his namesake ETF, has the Street-high price target for the stock. With 42 analysts in coverage, the consensus recommendation on the mega-cap company is a “Hold,” and the average price target of $299.28 is a discount of 32.7% to Friday’s close.

On the date of publication, Elizabeth H. Volk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com