{"id":10875,"date":"2024-05-06T17:20:48","date_gmt":"2024-05-06T17:20:48","guid":{"rendered":"https:\/\/topat10.com\/?p=10875"},"modified":"2024-05-06T17:20:48","modified_gmt":"2024-05-06T17:20:48","slug":"elon-musk-urges-investing-legend-warren-buffett-to-buy-a-stake-in-tesla-its-an-obvious-move","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=10875","title":{"rendered":"Elon Musk urges investing legend Warren Buffett to buy a stake in Tesla\u2014\u2018it\u2019s an obvious move\u2019"},"content":{"rendered":"\n

Investing legend Warren Buffett is something of a White Whale for Tesla<\/a> fans\u2014reeling him as stakeholder verges on a Captain Ahab-style obsession.\u00a0<\/p>\n

\n

Landing the Berkshire Hathaway<\/a> chair, a proponent of the same buy-and-hold philosophy prevalent among Tesla\u2019s small shareholder base, would be the ultimate seal of approval for the EV maker. Conversely, the fact that the world\u2019s savviest investor does not back Elon Musk, but rather his chief competitor, China\u2019s BYD<\/a>, rankles, since it calls into question the view that their totemic CEO is the\u00a0Thomas Edison<\/a>\u00a0of our lifetime.<\/p>\n

On Sunday, Musk renewed his appeal to the \u201cOracle of Omaha\u201d to bless him and his company with a confidence-boosting investment. Responding to a post by Galileo Russell, former non-executive director of failed EV startup Arcimoto, that urged Buffett to buy Tesla shares, Musk agreed.<\/p>\n

\n

He should take a position in Tesla. It\u2019s an obvious move.<\/p>\n

\u2014 Elon Musk (@elonmusk) May 6, 2024<\/a><\/p><\/blockquote>\n

\u201cHe should take a position in Tesla,\u201d he wrote. \u201cIt\u2019s an obvious move.\u201d\u00a0<\/p>\n

Previously such an investment was unlikely as Buffett\u2019s trusted friend and business partner Charlie Munger was not a fan of Musk.<\/p>\n

\u201cMunger could\u2019ve invested in Tesla at\u00a0~$200M valuation when I had lunch with him in late 2008,\u201d Musk revealed\u00a0last February<\/a>\u00a0in a post that suggested no further discussions had been held in the subsequent fifteen years.\u00a0<\/p>\n

Berkshire Hathaway spokesman Marc Hamburg could not be reached by\u00a0Fortune<\/em>\u00a0for comment.\u00a0<\/p>\n

\n

Munger could\u2019ve invested in Tesla at ~$200M valuation when I had lunch with him in late 2008<\/p>\n

\u2014 Elon Musk (@elonmusk) February 26, 2023<\/a><\/p><\/blockquote>\n

Munger\u2019s\u00a0passing in November<\/a>\u00a0shortly before his 100th birthday could in theory open the door to an investment by Berkshire Hathaway\u2014Buffett is at least more admiring of the entrepreneur.<\/p>\n

But he is also also tends to make safe bets in companies with strong brands like Apple<\/a> and Coca-Cola<\/a> or when he spots blood in the water, such as with his purchase of Goldman Sachs<\/a> shares at the height of the Lehman crisis.<\/p>\n

EV fundamentals deteriorate<\/h2>\n

Tesla by comparison has an unpredictable CEO who just\u00a0sacked his entire Supercharger team<\/a>\u2014long considered an unbeatable strategic advantage\u2014and is pivoting away from its core business selling cars toward robotaxis<\/a> and robotics<\/a>. At 56x estimated earnings for next year<\/a>, the multiple isn\u2019t attractive either for a value-minded investor like Buffett.\u00a0\u00a0<\/p>\n

\n

Trying to be useful lately! pic.twitter.com\/TlPF9YB61W<\/a><\/p>\n

\u2014 Tesla Optimus (@Tesla_Optimus) May 5, 2024<\/a><\/p><\/blockquote>\n

The outlook for Musk\u2019s EV business has darkened considerably as well. First-quarter global sales of Tesla dropped not just sequentially over the final three months of 2023, but\u00a0year-on-year<\/a>\u00a0as well. That was the first such decline<\/a> since the pandemic brought the global economy to a complete standstill in early 2020.\u00a0<\/p>\n

The latest sign that Tesla\u2019s car business is under severe pressure came on Monday, when Germany\u2019s motor vehicle authority\u00a0published<\/a>\u00a0new car registrations for the month of April.\u00a0<\/p>\n

Tesla volumes dropped by a third over the previous year\u2019s period, when EV makers still benefited from generous government subsidies that expired in December.<\/p>\n

\n

Tesla Robotaxi unveil on 8\/8<\/p>\n

\u2014 Elon Musk (@elonmusk) April 5, 2024<\/a><\/p><\/blockquote>\n

Sales of Tesla cars in\u00a0Germany<\/a>\u00a0are now down by 36% through the first four months. It is unclear how much if at all\u00a0production stoppages<\/a>\u00a0at its Berlin plant may have affected the figure, as Tesla has plenty of finished cars in its inventory.\u00a0<\/p>\n

The decline is reflective of a broader malaise that lead some to speculate<\/a> Tesla volumes could even dip in 2024 for the full year, despite assurances last month by Musk that they will increase even if the rate of growth will be \u2018notably lower<\/a>\u2019 than 38% from last year.<\/p>\n

While Buffett is renowned for sniffing out undervalued companies, whether that includes Tesla at this point remains to be seen.<\/p>\n<\/div>\n

Subscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n