Elon Musk says that Tesla could soon be worth more than Apple, and the company is banking on it with a $5-10 billion share buyback.
Today, Tesla released its third-quarter 2022 financial results. The automaker fell slightly short of revenue expectations but beat earnings expectations.
Tesla has had a tough time on the stock market in recent months, and its third-quarter results didn’t help.
After the results were published, Tesla held a presentation to analysts in which CEO Elon Musk took the microphone in a clear attempt to calm investors.
The CEO began by announcing that Tesla’s board had discussed a share buyback program and agreed that it would make sense to proceed. a share buyback of between 5,000 and 10,000 million dollars.
A share buyback program is where a company buys its own shares at market price. Generally, it is a sign that the company believes its stock is undervalued and is a way to increase the stock price.
Musk said the plan hasn’t been finalized, but it looks like Tesla is moving forward with a share buyback program soon.
After announcing the buyback program, the CEO commented on Tesla’s valuation:
I said on a conference call some time ago that I thought Tesla might be worth more than Apple, which was worth about $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:
I am now 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 about $2 trillion.
The CEO also stressed that even in a recession, Tesla could still generate “significant cash” in the next year. That’s why I think it would make sense to start a share buyback program.
Mush recognizes that it would take a lot of work, great execution and some luck to reach the Apple and Aramco rating.
