GM Share Buyback Reminds Analyst Of BlackBerry In The 2000s; Elon Musk Nods In Agreement
Portfolio Pulse from Anan Ashraf
New Street Research analyst Pierre Ferragu expressed concern over automakers' share buybacks, comparing it to BlackBerry's strategy in the late 2000s, which preceded its decline. General Motors Co (NYSE:GM) recently announced a $10 billion share buyback. Tesla Inc CEO Elon Musk responded to Ferragu's comment with a 'Yes,' acknowledging the comparison. Previously, Tesla was likened to BlackBerry by GLJ Research analyst Gordon Johnson, who predicted Tesla's valuation could implode due to increasing competition.
December 07, 2023 | 5:51 am
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NEGATIVE IMPACT
General Motors Co announced a $10 billion share buyback, which an analyst compared to BlackBerry's strategy before its decline, suggesting potential future risks for GM.
The comparison to BlackBerry's unsuccessful share buybacks in the late 2000s implies skepticism about the effectiveness of GM's buyback strategy. This could lead to negative investor sentiment in the short term, potentially impacting GM's stock price negatively.
CONFIDENCE 70
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Elon Musk's agreement with the analyst's comparison of automakers' share buybacks to BlackBerry's past may raise concerns about Tesla's future, despite no direct action from Tesla.
Musk's response may be interpreted as a tacit acknowledgment of the risks associated with share buybacks, which could affect investor perception of Tesla, especially given past negative comparisons to BlackBerry by analysts.
CONFIDENCE 60
IMPORTANCE 60
RELEVANCE 50