Major Tesla shareholder demands $15 billion stock buyback


Major Tesla shareholder demands $15 billion stock buyback

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Wajeeh Khan

May 19, 2022

Billionaire Leo Koguan urges Tesla to use its free cash flow for share repurchase.

Wedbush Securities’ Dan Ives cuts his price target on Tesla shares by about 29%.

The EV maker has tanked over 40% in the stock market since the start of 2022.

Shares of Tesla Inc (NASDAQ: TSLA) slid another 2.0% on Thursday after one of its largest shareholders demanded that the EV maker announces $15 billion in share repurchase.

Tesla should use FCF for the stock buyback

Leo Koguan wants Tesla to buy back $5.0 billion worth of its stock this year and another $10 billion in 2023 to make up for a 40% hit to the stock price this year.

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In a tweet to the company’s senior director of investor relations on Thursday, the billionaire asserted that Tesla uses its free cash flow to execute the stock buyback, while $18 billion worth of its cash reserve stays put.

Tesla had $2.20 billion of free cash flow in the first quarter. Koguan forecasts $8.0 billion in FCF for the EV maker this year, and more than twice as much ($17 billion) after capital expenditures in 2023.

Dan Ives cuts his PT on Tesla by 29%

Also on Thursday, notable Tesla Bull, Dan Ives – managing director at Wedbush Securities lowered his price target on Tesla to $1,000 a share. Previously he expected the stock to hit $1,400. On CNBC’s “Squawk Box”, he said:

China’s the heart and lungs of the Tesla story. We were optimistic Tesla will navigate these issues better. But what we’ve seen over the last few weeks makes us more negative about the June quarter as well as the second half.

Ives also dubbed the Elon Musk – Twitter extravaganza a “category five storm” for Tesla shareholders. Last month, billionaire philanthropist, Bill Gates revealed a sizable short position on TSLA.

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