Some investors in Tesla TSLA, +0.84% ​​are scrambling to buy shares after multiple stock splits and the company losing more than a third of its market capitalization in 2022, and Musk said on an earnings conference call that Tesla’s board discussed a buyback at between $5 billion and $10 billion. “We discussed the buyback idea extensively at board level. The board generally thinks it makes sense to do a repurchase, we want to work through the right process to do a repurchase, but it’s a possibility for us to do a $5 repurchase [billion] to $10 billion even in a downside scenario next year, given that next year is very difficult,” he said, adding that it is “obviously pending board review and approval.” “So we are likely to do some substantial repurchasing,” he concluded. The statement didn’t immediately cause Tesla stock to move, as it was closely followed by a revision to the forecast from Chief Financial Officer Zachary Kirkhorn, who said: “We expect to have growth just under 50%. [for deliveries] due to the increase in cars in transit at the end of the year.” Tesla delivered a record number of cars in the third quarter, but still missed analysts’ expectations and made it harder to meet executives’ goal for the year of a more than 50 percent increase in vehicle deliveries. Kirkhorn said the company would increase car production by 50 percent, “although we are monitoring supply chain risks that are beyond our control.” Shares fell more than 6% after the auto company’s earnings report. Tesla reported third-quarter profit of $3.29 billion, or 95 cents a share, on sales of $21.45 billion, up from $13.76 billion a year ago. After adjusting for stock-based compensation, the electric vehicle maker reported earnings of $1.05 per share, up from 62 cents per share a year ago. Analysts on average expected adjusted earnings of $1 a share on sales of $21.98 billion, according to FactSet. Tesla shares fell about 5% in after-hours trading immediately after the results were announced, after closing up 0.8% at $222.04 in regular trading. Tesla shares have fallen more than 37% so far this year, a steeper descent than the 22% drop in the S&P 500 SPX, -0.67% , after years of big gains. Experts have cited a number of reasons for the downturn, including increasing competition in the electric vehicle market, negative press surrounding Tesla’s claims of fully autonomous driving and real-world performance, and Musk’s focus on his takeover bid Twitter Inc. TWTR, +0.10%.
Don’t miss: The market share for electric vehicles is expected to roughly double None of this fazed Musk, however. He predicted that Tesla will be worth as much as the two most valuable companies in the world, Apple Inc. AAPL, +0.08% and Saudi Arabian Oil Co. 2222, +0.42% together. Both companies have market capitalizations in excess of $2 trillion. “Now I’m of the view that we can far exceed Apple’s current market share,” Musk said on the call, after referring to an earlier prediction that Tesla would reach Apple’s then-record market share. “In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. This is not to say that it will be done or that it will be easy, in fact it will be very difficult, it will require a lot of work, very creative new products, expansion and always good luck. But for the first time, I see a way for Tesla to be, say, about twice as valuable as Saudi Aramco.” In a report preview on Tuesday, Wedbush Securities analyst Daniel Ives said “the Street is starting to worry that the bloom is coming from the rose in Tesla’s story with delivery shortfalls front and center.” “Between the logistics issues in China, supply chain issues, FSD’s black eye moments, Musk’s Twitter fiasco, and EV competition growing around the world, there’s mounting pressure on Musk & Co. to prove themselves,” Ives wrote. Tesla’s gross margin for the automaker, which fell in the second quarter despite price hikes that Musk called “embarrassing,” was flat sequentially at 27.9 percent. Operating margin increased both sequentially and year-over-year, however, to 17.2% from 14.6% in both the prior-year third quarter and the prior-year quarter. Earnings Preview: Record Tesla Deliveries Covering a Demand Problem? In their call to investors on Wednesday, Tesla executives revealed that they will change the process for one of their most difficult tasks of late — transporting cars — in hopes of cutting costs. “We reach such significant delivery volumes in the final weeks of each quarter that carrying capacity becomes expensive and difficult to secure. As a result, we began to transition to a smoother delivery pace, leading to more vehicles in transit at the end of the quarter,” the company’s shareholder deck said. “We expect the smoothing of our outbound logistics during the quarter to improve cost per vehicle.”