Billionaire Leo Koguan, who claims to be the third-largest individual shareholder of Tesla stock, is calling on the carmaker to announce a $15 billion stock buyback as the company’s share price continues to fall.
In a tweet to Martin Viecha, Tesla’s senior director of investor relations, Koguan said the company should immediately announce its plans to buy back $5 billion of Tesla shares this year and $10 billion next year.
He added that Tesla should use its free cash flow to fund the buyback and that it shouldn’t affect its existing $18 billion in cash reserves.
In a follow-up tweet, Koguan said Tesla’s free cash flow amounted to $2.2 billion in the first quarter of the year. He added that he expects it to climb to $8 billion this year and $17 billion next year after capital expenditures have been factored in.
Tesla shares closed down more than 6 percent on Wednesday amid a broad market sell-off. The company’s stock has fallen more than 30 percent this year. Tesla was down slightly in morning trading Thursday.
A stock buyback — when a public company uses cash to buy shares of its own on the open market — is a method that firms use to try to return capital to shareholders.
Buybacks climbed to a record high of $850 billion in 2021.
During the year, Apple repurchased more of its own stock than any other public company, followed by Alphabet and then Meta. Alphabet announced another $70-billion buyback last month.