During today’s Tesla (TSLA) earnings call, Elon Musk touched on a number of key topics including how a share buyback in 2023 is possible, and that the company likely will do some form of meaningful buyback in the future.
“It is certainly possible to do a buyback in the order of $5-$10 billion. It’s likely that we’ll do some meaningful buyback,” Musk said.
Musk went on to note the importance of looking at Tesla’s long-term trends, while remarking on things like how he believes Tesla can exceed Apple’s current market cap saying, “Now throughout the opinion we can far exceed Apple’s current market cap. I can see a path that Tesla can be worth more than Apple and Saudi Aramco combined.”
Previously, Musk had teased the possibility of a $5 to $10 billion share buyback back in August. Unfortunately, given that a stock buyback hasn't been explicitly signed off on today, and will potentially take place in 2023 instead, there’s been some disappointment among investors with shares falling over 4 percent in after-hours trading.
Additionally, it’s been pointed out that Elon Musk and Tesla waiting until 2023 to do a share buyback could have something to do with the new buyback tax recently signed into law by President Joe Biden that’s set to go into effect in 2023.
It could be that Musk is looking to avoid the bad optics of pursuing a share buyback in 2022 as it may seem like he’s doing so in an effort to avoid the new 1 percent buyback tax. As noted by outlets like Reuters, the tax on share buybacks is intended to slow these down but likely won’t have much of an impact outside of irritating investors.
“A new 1% levy on share repurchases recently signed into law by President Joe Biden is meant to put the brakes on buybacks. It won’t, but instead might irritate executives and investors who never benefited in the first place,” reads the article from Reuters.
While investors won’t be able to enjoy a Tesla (TSLA) share buyback this year, the earnings call provided the assurance that a buyback isn’t off the table entirely, and may take place later in 2023. For more Tesla news, be sure to read through some of our other coverage including Tesla (TSLA) reporting an automotive gross margin of 27.9% in Q3 2022, and Tesla (TSLA) ending Q3 2022 with $21.1 billion in cash.
Morgan Shaver posted a new article, Musk says it is likely that Tesla (TSLA) will do a share buyback in 2023
So, what are the odds on "likely", compared to his track record on "will"?
He's pretty confident this buyback will jack up share prices?