Another Tesla Inc earnings call. and another fanciful prediction by Elon Musk is likely to encourage another open filing at the Securities and Exchange Commission on Wednesday.
The CEO of Tesla Inc.
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told investors Wednesday that he believes the electric carmaker’s valuation will exceed the combined market capitalization of the two most valuable companies in the world: Apple Inc.
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and Saudi Arabian Oil Co.
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“I think we can go beyond Apple’s current market cap,” Musk said. “In fact, I see a potential path for Tesla to be more valuable than Apple and Saudi Aramco combined.”
Based on Wednesday’s closing prices, the combined market capitalization of those two companies is about $4.4 trillion. But at least he adds a word of warning – “That doesn’t mean it will happen or it will be easy, in fact it will be difficult, requires a lot of work, the new product is very innovative. , extended and always good luck.”
Full income insurance: Elon Musk teases big Tesla stock buyback as CFO cuts forecast for annual deliveries and shares fall
This kind of overpredictability is not new to Musk. He was predict that Tesla will be worth as much as Appleand its market capitalization is now roughly the size of Apple then His explanation as to why Tesla would spike to that level is puzzling.
However, Musk’s current situation is new. When the soap opera broke out from the acquisition of Twitter Inc.
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ending, he is is said to need between 5 billion and 8 billion USD to complete that dealas our colleagues at Barron’s recently reported, and his only real avenue for that kind of cash is to sell Tesla stock.
Musk has been banned from selling stock before Tesla’s earnings report due to SEC regulations, so what better way to try and pump Tesla stock before that blackout is over than to come up with some projections? Far-fetched guessing on the company’s earnings call?
From Barron’s: A Tesla stock sale is coming. We know who, why and when, but not how much.
The more than $4 trillion price target wasn’t the only eye-opening statement Musk made on Wednesday’s call. He also told investors that he expected Tesla to make its first share buyback in the company’s history next year, and a major buyback by then: $5 billion to $10 billion. billion USD.
“Even in a bearish scenario next year, given that next year is very difficult, we still have the potential to hit $5. [billion] up to $10 billion in acquisitions. This is obviously awaiting the board’s review and approval,” he said. “So it’s likely we’ll make some meaningful acquisitions.”
Stephen Diamond, an associate professor at Santa Clara University, said it would be odd to announce a share buyback plan before it has been approved and formally launched by the board, despite the fact that the news is shared. early news does not automatically violate securities laws. School of Law.
“Best practices recommend waiting until you have your flock of ducks in a row before making such an announcement, but I doubt that will create any obvious legal problems,” he said. any”.
He added that the Tesla board may be seeking approval from auditors and legal counsel for the share buyback, which would be why it has yet to be approved.
“There is an accounting audit under Delaware law that the company must meet in order to buy back the shares,” Diamond said in an email. “In general, it can only buy back shares if there is a ‘surplus’ available. To assess that, support from their internal finance team is needed for the board of directors and possibly external opinions from their auditors and legal advisors. ”
While the early disclosure of the acquisition plans won’t automatically register alarms at the SEC office, these particular statements from Musk should get some attention at the regulator’s offices. . Musk has was facing re-decisions from the agency for the previous statementsand being targeted for failing to meet the deal he agreed in that case. Musk is also said to be actively under investigation for his conduct when he switched to acquiring Twitterwhich Twitter apparently confirmed in a legal filing earlier this month.
Than: Elon Musk’s legal battle with Twitter may be over, but his battle with the SEC continues
During the call, Musk will only say that he’s “excited about the Twitter situation,” while admits that “me and other investors are clearly overpaying for it right now.”
Tesla officials did not respond to requests for comment or respond to questions about whether Musk would need to sell more Tesla stock to complete the Twitter deal.
The question for Tesla investors, however, is whether they are overpaying for Tesla stock ahead of another stock sale from Musk, who has down billions of shares in the past yearwhich reportedly led to another SEC investigation. On Wednesday, however, shares fell more than 6% in after-hours trading despite the CEO’s promiscuity, which appears to be overshadowed by missed revenue and cut forecasts.
Perhaps investors are finally seeing through the call that Musk’s soaring earnings have lifted the value of Tesla’s stock in the past. But if Musk sells Tesla stock in the coming days after trying to articulate the company’s value, it won’t be investors knocking on his door, but possibly the SEC again.
