Tesla Investor Questions Rationale Of EV Maker Building Up Cash At 'Stupid Rate,' Suggests This 'Sensible' Alternative
Portfolio Pulse from Shanthi Rexaline
Gary Black of Future Fund criticized Tesla for accumulating a large cash reserve, suggesting it return some to shareholders through dividends or buybacks. Tesla's cash is predicted to reach $150B by 2030. Black highlighted that tech rivals, like Meta Platforms which recently initiated a dividend, are returning cash to shareholders, which could support Tesla's stock. He also mentioned a potential $50B buyback could increase Elon Musk's voting control. The Delaware Chancery Court nullified Musk's 2018 compensation plan, impacting future plans.
February 18, 2024 | 8:40 pm
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NEUTRAL IMPACT
Tesla is the third-largest holding in the Future Fund Active ETF, managed by Gary Black, who criticized Tesla's cash management strategy.
The mention of FFND primarily serves to establish Gary Black's credibility and stake in Tesla's financial strategies. While his criticism of Tesla's cash management could influence investor sentiment, the direct short-term impact on FFND's stock is neutral, as the ETF's performance is diversified across multiple holdings.
CONFIDENCE 60
IMPORTANCE 50
RELEVANCE 40
NEUTRAL IMPACT
Meta Platforms recently initiated a dividend, positively impacting its shares and serving as a model for Tesla's potential cash return strategy.
While Meta's initiation of a dividend is cited as a positive example for Tesla to consider, the direct impact on Meta's stock from this news is neutral. However, it highlights a trend among tech companies to return value to shareholders, potentially influencing investor expectations across the sector.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Gary Black suggests Tesla should return part of its large cash reserve to shareholders to support its stock price, potentially through dividends or buybacks.
Returning cash to shareholders through dividends or buybacks could positively impact Tesla's stock price by signaling confidence in the company's financial health and future prospects. It could also align Tesla's practices with those of its tech rivals, potentially making the stock more attractive to investors.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90