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Gary Black Proposes $10B Share Buyback for Tesla (NASDAQ:TSLA) Stock

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Gary Black proposes a $10 billion share buyback for Tesla spread out over three years. The fund manager also shared his expectations from Tesla’s Q3 print.

Gary Black, the Managing Partner of The Future Fund LLC, tweeted his views on Tesla (NASDAQ:TSLA) ahead of its third-quarter results scheduled for Wednesday. Black suggests that Tesla’s Board could authorize a $10 billion share buyback program and use $5 billion to immediately buy back shares from CEO Elon Musk. This would solve the dual purpose of helping Musk finance the Twitter (NYSE:TWTR) buyout and also reduce the overhang on Tesla shares and improve earnings per share.

On receiving Twitterati’s flak for his proposal, Black further explained that the buyback must be proposed over three years. With $18.9 billion in cash and the expectation of earning $100 billion in free cash flow over the next three years, a $10 billion buyback wouldn’t hurt the company, Black added. His assumption also includes all costs incurred toward Capex including “$35 billion for new Gigas, Optimus, Dojo, Robotaxis, and other initiatives.”

While giving his suggestions, Black also shared the open letter written to Tesla’s Board. As per the letter, Tesla is the largest holding of The Future Fund and the company continues to have full conviction in Tesla’s products, strategies, and management team.

On Tesla’s Q3 results, Black expects management to give more clarity on Tesla’s Q3 delivery shortfall and whether the same will persist in Q4.

Black noted, “Despite a risk TSLA mgmt gives a cautious outlook on 4Q deliveries on Wed’s 3Q conf call, we remain L/T bullish on TSLA, with EV adoption soaring in Europe and China, the US EV credit kicking in 1Q, and at least one new factory and Cyber Truck in 2023. Our TSLA $550 PT is unchanged.”

What is the Future Price of Tesla Stock?

On TipRanks, the average Tesla price target is $325.34, which implies 58.7% upside potential to current levels. TSLA stock has a Moderate Buy consensus rating based on 19 Buys, seven Holds, and four Sells. Meanwhile, the stock has lost 48.7% so far this year.


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