According to Berkshire Hathaway’s most recent financial reports, the company ended the first quarter with approximately $200 billion in cash, or $189 billion, to be exact.
That comes after Warren Buffett and company reduced their ownership of massive companies like Apple and Chevron. This past weekend, Buffett declared, “We only swing at pitches we like.”
Elon Musk, who of course runs Tesla TSLA, +0.66%, has an idea about how to use some of that cash from Berkshire Hathaway BRK.B, +0.07%. “He ought to invest in Tesla. It’s a clear move, Musk stated in a statement posted on his owned social media platform, X.
Musk did not elaborate on why it would be clear. Prior to his passing, Buffett and his late partner Charlie Munger praised the third-richest billionaire in the world. Munger remarked, “What Tesla has accomplished in the auto industry is a small miracle.”
However, Buffett is not usually drawn to Tesla’s financials.
Tesla is trading at 66 times projected earnings for the upcoming year, 9 times book value, and 57 times cash flow, according to FactSet. While this is elevated relative to other companies in the industry, it is still much less expensive than Tesla’s historical highs. Toyota TM, +0.90%, the second-biggest automaker by market capitalization, is trading at 10 times projected earnings for the upcoming year, slightly more than 1 times book, and 11 times cash flow.
Musk has already mentioned having met Munger; in one message, he claims to have done so in late 2008, while in another, he claims to have done so in 2009.
Musk recalled Munger telling the entire table at a lunch in 2009 about all the reasons Tesla would fail. “Made me pretty sad, but I told him that even though we would probably die, it was still worth trying,” in agreement with all those reasons.
Even though the stock rose 29% from its lows in late April, Tesla shares have fallen 27% so far this year.
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