Elon Musk teases big Tesla stock buyback as CFO cuts forecast for annual deliveries and shares fall

Tesla Inc. CEO Elon Musk hinted that the electric-car maker could buy back up to $10 billion worth of stock on Wednesday, as shares tumbled after third-quarter revenue fell and His CFO has lowered delivery expectations for the full year.

Some Teslas
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Investors have been inciting stock buybacks after multiple stock splits and the company lost more than a third of its market capitalization by 2022, and Musk said on an earnings conference call that the board Tesla’s board of directors discussed acquisitions between $5 billion and $10. Billion.

“We have widely debated the idea of ​​an acquisition at the board level. The board generally thinks the acquisition is reasonable, we would like to work on the right process to do the acquisition, but we can do the buyback with the order of $5 [billion] to 10 billion dollars even in a downward scenario next year, given that next year is very difficult,” he said, adding that it is “obviously awaiting the board’s review and approval.” . “

“So it is likely that we will make some meaningful acquisitions,” he concluded.

The statement didn’t immediately move Tesla’s stock, as it was closely followed by a forecast correction from Chief Financial Officer Zachary Kirkhorn, who said, “We expect only gains less than 50% growth [for deliveries] due to the high number of transit vehicles at the end of the year”.

Tesla delivered a record number of cars in the third quarter, but still fell short of analysts’ expectations and make it harder to achieve the operator’s goal for the year to increase vehicle deliveries by more than 50%. Kirkhorn said that the company will increase auto production by 50%, “although we are monitoring supply chain risks that are beyond our control.”

Shares fell 3% to 5% following the car company’s earnings report. Tesla reported third-quarter earnings of $3.29 billion, or 95 cents a share, on revenue of $21.45 billion, up from $13.76 billion a year ago. After adjusting for stock-based compensation, the electric vehicle maker reported earnings of $1.05 a share, up from 62 cents a share a year ago.

Analysts on average had expected adjusted earnings of $1 a share on sales of $21.98 billion, according to FactSet. Tesla shares fell about 5% in after-hours trading shortly after the announcement of the results, after closing with a 0.8% gain to $222.04 in regular trading.

Tesla stock is down more than 37% so far this year, a sharper drop than the S&P 500 index’s 22% drop.
after years of achieving outstanding profits. Experts have given many reasons for the downturn, including increased competition in the electric vehicle marketnegative press around Tesla’s fully self-driving car claims and real-world performanceand Musk’s attention was diverted to His attempt to acquire Twitter Inc.
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Do not miss: Electric vehicle market share is expected to nearly double

However, none of that appeased Musk. He predicts that Tesla will be worth as much as the two most valuable companies in the world, Apple Inc.
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and Saudi Arabian Oil Co.
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combine. Both companies have a market capitalization of up to $2 trillion.

“Now I think we can go beyond Apple’s current market,” Musk said on the call, after referencing predicted earlier that Tesla would reach Apple’s then-record market capitalization. “In fact, I see a potential path for Tesla to be more valuable than Apple and Saudi Aramco combined. That doesn’t mean it will happen or it will be easy, in fact it will be difficult, requires a lot of work, new products are innovative, extensible and always lucky. But the first time I saw it, I saw that Tesla has a way to be, let’s say the value of Saudi Aramco is almost double. “

In a preview of Tuesday’s report, Wedbush Securities analyst Daniel Ives said that “Street is starting to worry that the bloom is fading in the Tesla story with delivery shortages ahead and center.”

“Amid logistics problems in China, supply chain problems, FSD black-eye moments, Musk’s Twitter debacle, and electric vehicle competition, pressure is mounting,” Ives wrote. force Musk & Co to prove themselves.”

Tesla’s automotive gross margin, fell in the second quarter despite a price increase that Musk called “embarrassing” respectively 27.9%. However, operating margins increased sequentially and year-over-year, to 17.2% from 14.6% in both the third quarter a year ago and the quarter prior.

Earning Preview: Do Tesla’s record deliveries mask a demand problem?

In an exchange with investors on Wednesday, Tesla executives revealed that they would be changing the process for one of their most challenging tasks, late-carriage — in the hopes of reducing cost.

“We are experiencing significant delivery volumes in the final weeks of each quarter so capacity is becoming expensive and difficult to secure. As a result, we began to transition to smoother delivery speeds, which resulted in more vehicles being shipped at the end of the quarter,” the company’s shareholder board post said. “We expect that smoothing out our outbound logistics throughout this quarter will improve cost per vehicle.”


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