Tesla investors beg Elon Musk to buy back shares to boost stock price

Two years ago this month, Tesla fans learned that the electric car maker’s stock would join the S&P 500, and that Elon Musk was converting retail investors into Tesla investors.

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Updated on:
November 23, 2022 at 18:51 pm

Tesla recently fell to a two-year low market cap. (AFP)

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More recently, some of those same proponents are complaining and engaging in gallows humor about the U-turns the stock has made since then. It more than tripled in a year before giving up nearly all of those gains, and so far Musk’s acquisition of Twitter appears to have been an unfortunate one that did significant damage.

The platform’s more than 8,600 users have been following Musk for weeks after Tesla fell to a two-year low on Monday, listening to a Twitter Spaces conversation with the host titled “$TSLA Bagholder Therapy.” Many complained that the CEO dumped his stock and demanded a buyback.

“It’s up to the Tesla board,” Musk responded to one such request last week. He said on an earnings call last month that the board generally believes buybacks are justified and that buybacks of $5 billion to $10 billion are possible.

Authorizing the buyback would signal Tesla’s board’s confidence that the stock is undervalued. Musk hasn’t been shy about talking about stock prices in the past, but on a recent earnings call he was very bullish on Tesla’s potential, saying he thinks Tesla could be worth more than Apple and Saudi Aramco combined. Three weeks later, he undercut those comments by selling another $3.95 billion worth of shares, bringing his total disposition over the past year to about $36 billion.

Musk’s incessant tweets about the social media company he now owns, rather than the automaker he’s paid to run, show no sign of stopping. That didn’t help the already-under-pressure stock after Tesla warned last month that it could fall just short of its goal of increasing vehicle deliveries by 50% this year.

Tesla lowered prices in China after Musk admitted that demand was “a bit tough” due to economic downturns in China and Europe and Fed rate hikes, and one analyst said he wouldn’t be surprised if the company made the future. Weeks further cut.

For all these worrisome reasons, Tesla still has a lot going for it. It remains well ahead of the major U.S. EV brands and is well-positioned to benefit from tax credits provided to consumers and battery makers under the Inflation Reduction Act. Established automakers including Volkswagen AG and Mercedes-Benz have stumbled as they try to catch up with the electric vehicle leader.

If Tesla does end up doing its first-ever share buyback, it would run counter to what the company told investors whether it would return some cash to shareholders: the company intends to retain all future earnings to fund further growth. Coming up with a coherent message about changing your mind can be tricky in this regard.

First published date: Nov 23, 2022 at 18:51 PM CST


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