Tesla investors eager for ‘$TSLA Bagholder Therapy’ push Musk for stock buyback

0



Two years ago this month, Tesla fans learned shares of the electric car maker were joining the S&P 500 index, and Elon Musk was turning retail investors into Teslanaires.

Lately, some of the same supporters are complaining and engage in black humor about the U-turn that stocks have made since then. It more than tripled in a year, only to then give up virtually all of those gains, with significant damage made for what so far appears to be an ill-fated acquisition by Twitter’s Musk.

On Monday, after Tesla fell to a two-year low, more than 8,600 users of the platform that has been worrying Musk for weeks tuned in to a Twitter Spaces conversation that the host captioned “$TSLA Bag Holder Therapy.” many have She complained about the CEO dumping his stock and they’re asking for a share repurchase.

“This is up to the Tesla board,” Musk answered to one of those requests last week. He said during an earnings call last month that the board generally thought a buyback made sense and that something on the order of $5 billion to $10 billion was possible.

Authorizing a buyback would be a sign of confidence by Tesla’s board that the shares are undervalued. Musk, who has not been shy in the past about Talk lowly the share price, he was tremendously bullish on its potential during the last earnings call, saying he saw potential for Tesla to be worth more than Apple and Saudi Aramco combined. He undermined those comments three weeks later by selling another $3.95 billion lot of its shares, bringing the total it had sold in the past year to about $36 billion.

Musk’s incessant tweets about the social media company he now owns, instead of the automaker it’s been. paid handsomely for running, he shows no signs of letting up. That’s not helping a stock that was already under pressure after Tesla warned last month that it probably will. come short of its goal of expanding vehicle deliveries by 50% this year.

After Musk acknowledged that the lawsuit was “a little harder” to get due to economic downturns in China and Europe and the Federal Reserve interest rate increases, Tesla reduced prices in China, and an analyst He has said he won’t be surprised if the company makes further cuts in the coming weeks.

For all these reasons for concern, Tesla still has a lot to offer. It remains by far the dominant electric vehicle brand in the US and is well positioned to benefit from the tax credits that the Inflation Cut Act makes available to both consumers Y battery manufacturers. Established automakers, including Volkswagen and Mercedes-Benz, maintain stumbling in their attempts to catch the EV leader.

If Tesla does end up doing its first share buyback, it will go against what the company is telling investors who wonder if it will ever return any cash to shareholders: that it intends to retain all future profits for finance further growth. Proposing a coherent message about a change of heart in this regard could be difficult.

Our new weekly Impact Report newsletter will examine how ESG news and trends are shaping the roles and responsibilities of today’s executives, and how they can best address those challenges. Subscribe here.



LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.