Tesla investor calls for $15 billion share buyback after stock price drops

Tesla CEO Elon Musk is trying to buy Twitter and run multiple companies at the same time.

James Glover II | Reuters

Billionaire Leo Koguan, who claims to be the third-largest individual shareholder of Tesla stock, is calling on the automaker to announce a $15 billion share buyback as the company’s share price continues to fall.

In a tweet To Martin Viecha, Tesla’s senior director of investor relations, Koguan said the company should immediately announce that it plans to buy back $5 billion of Tesla stock this year and $10 billion next year. He added that Tesla should use its free cash flow to finance the buyback and that it should not affect its existing cash reserves of $18 billion. Tesla did not immediately respond to a CNBC request for comment.

Shares of Tesla closed down more than 6% on Wednesday amid a broad market sell-off. Shares of the company are down more than 30% this year.

Share buybacks, when a public company uses cash to buy its own shares on the open market, is a method companies use to try to return capital to shareholders.

Buybacks reached a record $850 billion in 2021. During the year, Apple bought back more own shares than any other public company, followed by Alphabet and Meta. Alphabet announced another $70 billion buyback last month.

Koguan “bet the house” on Tesla from the start of the coronavirus pandemic, according to a Forbes report from October that said he had made billions betting on the electric vehicle maker. Koguan reportedly became involved with Tesla after selling his shares in other companies such as Baidu, Nvidia, China Mobile and Nio.

“I considered myself an Elon fan,” Koguan reportedly said. “I’d say he’s the only person I really respect on Earth.”

Musk, the world’s richest person on paper, said Tuesday that he has “suspended” the Twitter deal until he learns more about how many fake or spam accounts there are on the social network.

Analysts at Jefferies said on Tuesday that Musk appears to be trying to push the price down due to the recent market sell-off.

“Recent comments from Elon Musk suggest he is trying to negotiate a lower offer price,” equity analyst Brent Thill and equity associate James Heaney said in a research note.

“We believe Musk is using his investigation into the percentage of fake TWTR accounts as an excuse to pay less than $54.20 per share. In reality, the NASDAQ COMP is down 25% YTD. [year-to-date] and Elon Musk realizes he may be overpaying for the asset.” CNBC reached out to Tesla for comment but did not hear back.

Wedbush analyst and Tesla bull Dan Ives told CNBC on Wednesday that Musk’s plan to buy Twitter has been a “huge overshoot” on Tesla stock.

Ives, who says he has followed Musk for decades, said Musk has had a “black eye” in recent weeks.

“The way he’s handled this, I think has been unconscionable,” Ives said, adding that it “left a little bit of a stain” on Tesla’s stock.

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