Elon Musk says Tesla (TSLA) could soon be worth more than Apple (AAPL), and the company is investing its money in that position with a $5-10 billion share buyback.
Today, Tesla released its third-quarter 2022 financial results. The automaker posted a small revenue loss based on expectations, but beat profit expectations.
Tesla has struggled in the stock market in recent months, and third-quarter results haven’t helped.
After the earnings release, Tesla held a conference call with analysts in which CEO Elon Musk took the microphone in a clear attempt to calm investors down. The CEO began by announcing that Tesla’s board had discussed a stock buyback program, and he agrees that a $5 billion to $10 billion stock buyback would make sense.
A share buyback program is for a company to buy back its own shares at market price. This is usually a sign that the company thinks its stock is undervalued and is a way to drive up the stock price.
Musk said the plan isn’t finalized, but it looks like Tesla will be moving forward with a stock buyback program soon.
After announcing the buyback program, the CEO commented on Tesla’s valuation:
I said on an earnings call a while ago that I thought Tesla might be worth more than Apple, which was worth around $700 billion at the time.
Tesla is now worth around $700 billion based on its market capitalization.
Now Musk has a new target for Tesla’s valuation:
Now, I am of the opinion that we can far exceed Apple’s current market capitalization. I see a way for Tesla to be worth more than Apple and Saudi Aramco combined.
Apple is now worth $2.3 trillion and Saudi Aramco is worth around $2 trillion.
The CEO also pointed out that even in a bad recession, Tesla could still generate “significant cash” next year. Hence his conviction that it would be wise to initiate a share buyback program.
Musk does not include Tesla Optimus, the company’s planned humanoid robot, in his equation, and says it would take hard work, excellent execution and a bit of luck to get Apple and Aramco’s valuation. .
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