Tesla stock has dropped dramatically since the start of the new year. Its previous average, which sat at a healthy $1,000, now sits at an approximate $720 per share, wrought by a multitude of factors like the overall tech stock dip, Elon Musk's Twitter bid, China stopgaps, and more. The dwindling Tesla stock forecast has many internal investors on edge, most prominent among them being its supposed third-largest shareholder, Leo Koguan.
In a series of tweets aimed at Tesla's senior director of investor relations, Martin Viecha, Koguan expresses a need for the company to purchase back its shares at a $15 billion premium. He cites the immediacy of a $5 billion buyback of Tesla stocks for 2022, with a $10 billion buyback earmarked for next year, noting that Tesla should utilize its free cash flow for the orders "without effecting its existing $18 billion cash reserves with ZERO debt."
A stock buyback refers to when a public firm, in this case, Tesla, utilizes its own capital to purchase its own stock on the open market to serve several various purposes, one of which is to put cash back in investors' pockets. According to CNBC, stock buybacks are at an all-time surging point, estimating a potential $238 billion in Q4 2021 alone.
Tesla was removed from the S&P 500 on Wednesday, May 18, due to racial discrimination concerns and autopilot failures causing crashes. Upon market close on Wednesday, Tesla stocks were down by 6%, with a total depletion for the year at a whopping 30% overall. At the time of writing, it's on the rebound, seeing a 0.79% uptick at $715.
Tesla’s actual free cash flow $2.228B in Q1'22 and I estimated $8B in free cash flow this year and $17B next year after CAPEX. Therefore, Tesla has adequate cash flow to fund stock buy back $5B this year and $10B next year.
— KoGuan Leo (@KoguanLeo) May 19, 2022
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Koguan's Twitter discussion did not stop there, however, as the billionaire continued to discuss the nature of Tesla's free cash flow as $2.228 billion for the first quarter of the year, highlighting a potential $8 billion forecast for its 2022 free cash flow. He also noted a $17 billion free cash flow for 2023, citing "after CAPEX," meaning capital expenditures.
"Fremont, Shanghai, Austin and Berlin money printing machines are running in full speed, Tesla can invest in FSD, bot and factories while buying back its undervalued stocks," Koguan adds in yet another tweet. "Shock and wake up few braindead analysts to their senses. Tesla is a Phoenix rising from the ashes."
Koguan, who got in on the Tesla stock climb in the burgeoning rise of the pandemic circa early 2020, regards himself as "Elon's fanboy," according to Forbes. The billionaire purportedly sold off in some of the biggest tech stocks of the time to cash in on the rising Tesla shares, including the likes of Nvidia, Nio, Baidu, and more.
Gary Black, the managing partner of the Future Fund LLC and SEC-registered investment adviser, sided with Koguan's remarks in a Tweet that features a charted forecast of Tesla's free cash flow and more. He says, "stock buybacks of $5B in 2022 and $10B in 2023 are far superior to letting cash build on the balance sheet at 2-3% ROI."
Musk's Twitter shenanigans can largely be attributed to Tesla's stock drop, as the tech firm reels over his various antics on the $44 billion deal.
