They would form one of the most powerful pairs in the business world.
Imagine an alliance between Elon Musk, 51, the serial entrepreneur who has become the most influential CEO in the world, and Warren Buffett, 92, the most admired investor on the planet.
Their names resonate almost everywhere. They have become household names, and many entrepreneurs and investors have made them role models. They are among the few executives to enjoy wide popularity in and beyond the business community.
Musk has founded or co-founded four companies, the best known of which are electric-vehicle maker Tesla (TSLA) and space-technology company SpaceX. He acquired the microblogging platform Twitter, a social network that some call the town square of our time.
He was also the first investor in OpenAI, the startup that has just brought artificial intelligence into a new era with the ChatGPT chatbot.
Buffett is simply the Oracle of Omaha, the CEO of investment firm Berkshire Hathaway, (BRK.A) (BRK.B) the person investors turn to when things go wrong. Retail investors seek his advice. They want to know how he will position himself in the face of an economic crisis.
CEOs seek his sound advice while hoping that he will invest in their business. During the financial crisis of 2008, Buffett became the savior of the banks. In September 2008 he saved Goldman Sachs from filing for bankruptcy by granting an emergency loan of $5 billion to the prestigious investment bank. A few years later, Buffett rescued Bank of America, which was just as devastated by subprime mortgages.
In recent days, the White House has reportedly been on the phone with the billionaire for advice on managing the current banking crisis.
Musk and Buffett: Allies or Rivals?
If they are popular and each admires the other, Buffett and Musk have never been involved in a business deal together. The highly respected investor has never put money into the tech mogul's companies.
In fact, Buffett bet on a Chinese rival of Tesla, BYD, (BYDDY) which is the global leader in clean vehicles, a category that includes electric and hybrid vehicles. Tesla manufactures only electric vehicles.
Via Berkshire Hathaway, Buffett in 2008 acquired 225 million BYD shares for about $232 million. Since then, the investment has grown substantially as BYD's stock price rose over the years.
Over several months, however, Buffett has been reducing his BYD stake. Berkshire has sold nearly 95 million of its original 225 million shares, including last month's sales of 4.24 million shares for nearly $140 million, the firm announced in a regulatory filing early this month.
Berkshire remains one of BYD's biggest holders with 130.3 million shares, representing about a 12% stake in the Chinese group.
Did Buffett Miss a Tesla Opportunity?
This seems to open a window through which Musk seems to want to climb.
Last month, a Twitter user asked him which company Buffett should invest in given Berkshire Hathaway's big war chest. Musk took full advantage, sending signals to Buffett.
"Warren [Buffett's] Berkshire Hathaway now has over $128 billion dollars in cash, what stocks should they buy?" the Twitter user asked.
Musk immediately replied that the holding company should invest in Tesla.
"Starts with a T …" the billionaire said.
Musk has once again tried to sell the idea of a Tesla investment to Buffett.
The billionaire repeated that if the Oracle of Omaha several years ago had invested in the Austin automaker, he would have made a huge profit today. Tesla then was valued at $200 million; its market capitalization now exceeds $620 billion. Tesla's market value even touched $1 trillion in October 2021 and in March 2022 before retreating.
"Watch Warren Buffett portfolio’s growth since 1994 to 2022," a Twitter user posted on March 26. "A true legend and king of investing!"
"Or he could have just invested in Tesla at $200M market cap when he had the opportunity to do so," Musk commented.
The CEO of Tesla seems to say that instead of investing in a whole host of companies between 1994 and 2022, Buffett would have had a better result simply by investing in Tesla from 2008 to 2022.
Musk also suggests that Tesla has a lot of potential. The group has promised to produce 20 million vehicles a year by 2030, compared with 1.37 million units last year.
Musk likes to tell the following anecdote. In 2009, Charlie Munger, Buffett's right-hand man and vice chairman of Berkshire Hathaway, told him that Tesla would fail.
"I was at a lunch with Munger in 2009 where he told the whole table all the ways Tesla would fail," the tech mogul posted on Feb. 16, 2022. "Made me quite sad, but I told him I agreed with all those reasons & that we would probably die, but it was worth trying anyway."
He seems to ask: Who's having the last laugh now?
