Future Fund LLC's managing director, Gary Black, thinks Tesla Inc. (NASDAQ:TSLA) should use its excess cash to buy back the EV giant's shares from shareholders.
Buy Back More Stocks Rather Than Build Excess Cash
Taking to the social media platform X on Friday, the investor said that Tesla needed to use the "$37 billion in excess cash" to purchase stock back, “rather than let it build up as more excess cash." He added that institutions would prefer Tesla to do the latter.
Black also said that institutional investors underown Tesla because the stock looks more expensive when compared to their estimates of its value. "Valuation is why TSLA remains under owned – not because of its high volatility," he said.
He also drew a comparison of Tesla's stock with that of Nvidia Corp (NASDAQ:NVDA), reiterating that the company's valuation relative to its share price remains the reason why institutions shy away from the stock.
Gary Black Says TSLA Will Decline In Q4
The comments come as the investor had earlier said that Tesla's stock would surge over strong Q3 deliveries, which would beat analyst estimates. However, he reiterated its price would then decline in the fourth quarter as "the new more affordable model falls short of expectations," he said.
Ross Gerber Says Tesla Surge Temporary Amid Elon Musk's $1 Billion Purchase
Elsewhere, Gerber Kawasaki‘s co-founder, Ross Gerber, also predicted the decline of Tesla's stock, saying that the "good news" might not last as long and could end in two weeks, followed by a "long winter," possibly hinting at uncertainty over Q4 deliveries due to a lack of incentives on EVs that would cause a price surge.
However, Tesla's stock rallied in the first place after an SEC filing showcased CEO Elon Musk buying over $1 billion in Tesla's shares, which led to the stock smashing the $420 mark.
Musk has also more or less recovered all of his lost wealth since he extended support to President Donald Trump last year, which led to widespread criticism and a severe decline in Tesla's sales.
Tesla scores well on Momentum and Growth metrics, while offering satisfactory Quality, but poor Value. For more such insights, sign up for Benzinga Edge Stock Rankings today!
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