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One proposed method involves Tesla executing a $10 billion buyback at $210 per share, then holding shares as treasury stock. If the share price later rises to, say, $315, Tesla could sell the treasury shares, realizing a significant profit.
This strategy has appealing aspects:
Leverage future appreciation: By holding treasury shares, Tesla can benefit from stock price increases.
Financial flexibility: Treasury shares can be sold later if liquidity needs arise.
However, this plan introduces risks, particularly if the stock dips or if market conditions worsen.
Risks and Market Reactions
While announcing a buyback can be bullish, it also carries downside risks: