Investor's Corner

Tesla whale suggests $15 billion TSLA buyback amid dropping share prices

(Credit: Joe Tegtmeyer)

Tesla whale and billionaire Leo KoGuan, who is estimated to be one of the electric vehicle maker’s largest individual shareholders, has called on the company to announce a $15 billion buyback. KoGuan shared his suggestions through a tweet to Martin Viecha, Tesla’s senior director of investor relations. 

In his post, KoGuan noted that Tesla should immediately announce that it is planning to buy back $5 billion of TSLA shares this year and another $10 billion next year. The investor noted that if Tesla used its free cash flow to fund the stock buyback, it would not even affect the company’s $18 billion cash reserves. 

“Tesla must announce immediately and buy back $5 billion of Tesla shares from its free cash flow this year and $10 billion from its free cash flow next year, without affecting its existing $18 billion cash reserves with ZERO debt,” KoGuan wrote. 

Tesla shares have dipped as of late, with the company closing down more than 6% on Wednesday amid a broad market selloff. Despite the pressure being felt by the broader market, however, Tesla shares are still down over 30% this year so far. 

As noted in a CNBC report, a stock buyback involves a public company utilizing cash to purchase shares its own shares in the open market. The method is used to try to return capital to shareholders, and it has been quite popular among high-profile companies. In 2021, for example, buybacks rose to a record high of $850 billion. 

Among the companies that utilized stock buybacks last year include Apple, which repurchased more of its stock than any other public company, as well as Meta and Alphabet. Just last month, Alphabet announced yet another $70 billion buyback. 

KoGuan became one of Tesla’s most prolific individual investors after he “bet the house” on the electric vehicle maker early on in the pandemic. The investor reportedly made billions by going long on TSLA stock, and his conviction on Tesla is so strong that he reportedly sold his shares in other companies like NIO, NVIDIA, and Baidu to focus on the EV maker

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Tesla whale suggests $15 billion TSLA buyback amid dropping share prices
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