Opinion: Elon Musk pumps up Tesla stock with ridiculous $4 trillion target Next dump coming?

Another imaginary Elon Musk forecast, prompting another Tesla Inc earnings call and possibly another open filing with the Securities and Exchange Commission on Wednesday.

Tesla Inc. CEO of TSLA,
told investors on Wednesday that he believes the electric car maker’s value will exceed the combined market capitalization of the world’s two most valuable companies: Apple Inc. AAPL,
and Saudi Arabian Oil Co. 2222,

“I think we can greatly exceed Apple’s current market value,” Musk said. “In fact, I see a potential way for Tesla to be worth more than Apple and Saudi Aramco combined.”

Based on Wednesday’s closing prices, the two companies have a combined market capitalization of about $4.4 trillion. But he added at least one caveat – “That doesn’t mean it’s going to happen or it’s going to be easy, in fact it’s going to be very difficult, it’s going to require a lot of work, a lot of creative new products, expansion and always good luck.”

Full coverage of earnings: Elon Musk suggests massive buyback of Tesla stock as CFO misses forecasts for annual shipments and stock falls.

This kind of extreme prediction is not new for Musk. He had already predicted that Tesla would be worth as much as Apple, and its market cap is now roughly the same size as Apple’s at the time, though he was far from explaining why Tesla would rise to that level.

Although Musk’s current situation is new. Twitter Inc. As a spin-off from the deal to buy TWTR,
As our colleagues at Barron’s recently reported , it’s believed to need $5 billion to $8 billion to complete this deal, and the only realistic way for it to get that kind of cash is to sell Tesla stock.

Musk is barred from selling stock ahead of Tesla’s earnings report due to SEC rules, so what better way to try and pump up Tesla’s stock before the shutdown ends than to make some far-fetched predictions about the company’s earnings?

From Barron’s: A Tesla stock selloff is coming. We know who, why and when, but not how much.

The $4 trillion-plus price target wasn’t the only claim Musk made on Wednesday’s call. He also told investors that Tesla will do its first stock buyback in its corporate history next year, and a big one at that: $5 billion to $10 billion.

“Even in a negative scenario next year, we still have the ability to do a $5 business, given that next year is very difficult. [billion] 10 billion dollars to buy back. This is obviously pending council review and approval,” he said. “So we’re likely to do some meaningful buybacks.”

Stephen Diamond, an associate professor at Santa Clara University, said it was unusual to announce a share buyback plan before it had been approved by the board of directors and formally approved, although breaking the news early did not automatically violate securities laws. Law faculty.

“Best practices would suggest waiting for your ducks to be in a row before making such an announcement, but I doubt that would pose any obvious legal problems,” he said.

He added that Tesla’s board is likely seeking approval from its auditors and legal counsel for the share buyback, so it has yet to be approved.

“Under Delaware law, there is an accounting test that a company must meet to buy back shares,” Diamond said in an email. “Generally, he can buy back shares only when he is ‘plus’. Assessing this will require board support from their internal finance team and possibly external input from auditors and legal counsel.”

While early disclosure of buyback plans doesn’t automatically set off alarm bells at the SEC office, statements like these from Musk will perk up some ears in the regulator’s offices. Musk has already faced charges from the agency over his earlier statements, and in that case was targeted for not living up to the deal he agreed to. Musk is also reportedly being actively investigated for his conduct in his move to acquire Twitter, Twitter confirmed in a legal filing earlier this month.

More: Elon Musk’s legal battle with Twitter may be over, but his war with the SEC continues

During the call, Musk would only say that he was “excited about the situation at Twitter,” while admitting that “I and other investors are clearly overpaying for it right now.”

Tesla officials did not respond to a request for comment or respond to a question about whether Musk would need to sell more Tesla stock to complete the Twitter deal.

The question for Tesla investors is whether they overpaid for Tesla stock before another stock sale from Musk, who has already unloaded billions in shares last year, resulting in another SEC investigation. Shares fell more than 6% in after-hours trading on Wednesday, despite the chief executive being overshadowed by the earnings miss and the forecast forecast.

Perhaps investors are finally seeing Musk increase earnings, which has boosted Tesla’s stock value in the past. But if Musk sells Tesla stock in the coming days after trying to talk up the company’s value, it may be the SEC again, not investors, knocking on his door.

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