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Will Warren Buffett invest in Tesla with his $190 billion cash pile?

Will Warren Buffett invest in Tesla with his $190 billion cash pile?
Elmaz Sabovic

The recent annual Berkshire Hathaway (NYSE: BRK.A) shareholder meeting unveiled some noteworthy actions by renowned investor Warren Buffett in the previous quarter, sparking industry-wide attention.

Specifically, it was disclosed that Buffett significantly decreased his stake in Apple (NASDAQ: AAPL) by 13%, further boosting Berkshire Hathaway’s cash reserves, which are nearing $190 billion, and positioning it for future investments.

These developments led Elon Musk, CEO of Tesla (NASDAQ: TSLA), to propose investing in TSLA stock as an ‘obvious move’ for Buffett.

Warren Buffett might not be interested

Buffett’s disinterest in Tesla is likely rooted in its adherence to a value investing philosophy where investors prioritize high-growth companies and opt for those reasonably priced relative to intrinsic value.

Tesla boasts a high forward price-to-earnings ratio and lacks a dividend policy, making it less appealing to value investors like Berkshire.

During Berkshire Hathaway’s 2023 annual meeting, Buffett explained why he avoids investing in most car companies: the industry’s fierce competition and the uncertainty surrounding the future trajectory of companies like Tesla.

Buffett emphasized the significance of foreseeing a business’s future path. While he admitted difficulty predicting where automakers will stand in the next five to 10 years, he expressed greater confidence in his ability to anticipate Apple’s trajectory.

This is not the first time that Musk has tried to get Berkshire Hathaway to invest in Tesla. He held meetings with Charlie Munger, Buffett’s right-hand man, and recently expressed regret that Sage of Omaha didn’t invest in the company when its value was 0.1% of today’s.

Tesla faces headwinds but might turn a corner soon

Buffett’s lack of interest in Tesla is easily explainable by the recent layoffs, the slowdown in production and deliveries, and falling product prices.

Despite regaining some of their lost ground in recent trading sessions, TSLA shares are still down 27.06% year over year.

TSLA stock YTD price chart. Source: Google Finance
TSLA stock YTD price chart. Source: Google Finance

However, with the recent announcement of increased AI applications, Robotaxi, more affordable models in 2024, and FSD rollout in China, the EV maker could soon cause its TSLA stock to surge again.

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