Tesla, Inc. experienced a significant drop in its stock value, with shares plummeting over 15% during the past week, ultimately closing at $211.99.

This marks Tesla’s most challenging week in terms of stock performance this year, though the company still boasts a 96% increase in share value year-to-date.

The dip in stock value followed Tesla’s third-quarter earnings call, where CEO Elon Musk expressed a notably pessimistic stance on macroeconomic issues. The company reported $23.35 billion in revenue and $1.85 billion in profits for the period ending September 30, 2023. While these figures represent substantial earnings, they signify a decline compared to the preceding quarter and the same quarter in the previous year.

During the earnings call, Musk emphasized the need for cost-cutting and price reductions for Tesla in the forthcoming quarters. He acknowledged that the economy’s uncertain outlook demands proactive measures to ensure the company’s financial stability.

Musk said during a question-and-answer portion of the earnings call with analysts, “I am worried about the high-interest rate environment that we’re in,” he said, adding that “If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car. They simply cannot afford it.”

Also, Tesla’s new CFO Vaibhav Taneja, on the call, echoed Musk’s sentiment. “Reducing the cost of our vehicles is our top priority. We’ve tried to offset such adjustments via our focus on reducing costs. However, there is an inherent lag in cost reductions, which in turn impacts margins,” he said.

Musk also provided a tempered update on the long-awaited Cybertruck, asserting that the vehicle’s launch would require careful consideration of pricing to accommodate its extensive demand. While more than one million reservations have been made for the Cybertruck, Musk emphasized the need to strike a balance between affordability and profitability.

In response to rising interest rates, Musk expressed concern about the potential impact on consumers’ purchasing power. He said that making Tesla’s vehicles accessible to a wide range of buyers remains a top priority.

Although Musk articulated a long-term vision for Tesla, including significant investments in artificial intelligence and the potential for fully autonomous vehicles, the market did not respond as positively as it has in the past. Some analysts, typically bullish on Tesla, issued cautious notes following the Q3 results, indicating a more cautious outlook for the company’s future.

As an example, Morgan Stanley’s Adam Jonas adjusted his price target from $400 to $380. However, it’s worth noting that even with this reduction, his forecast suggests a potential upside of over 56%, as indicated in a note released after the Q3 Tesla call.

“How can we defend a ‘growth’ stock that appears ready to enter its 2nd consecutive year of earnings decline?” Jonas asked. He later answered, “We feel it is also important and reasonable to consider the long-term potential of the products and services being commercialized by the company,” in the note.

Tesla’s recent stock fluctuations have prompted reflection on the broader landscape for electric vehicles (EVs). Some analysts interpret Tesla’s Q3 results as a signal of a potentially challenging outlook for the EV industry as a whole, impacting not only Tesla but also Chinese EV manufacturers and other automakers.

However, during the call, Musk made several optimistic statements, including his assurance to investors that Tesla remains committed to substantial investment in AI development. He described AI as a “massive game changer” with the potential to propel Tesla to become the world’s most valuable company by a significant margin. Musk envisions achieving this through the widespread adoption of fully autonomous cars and fully autonomous humanoid robots.

Tesla may make the car of the future, but its latest project looks to the past: A ’50s-style diner and drive-in movie theater in Hollywood that will double as a Supercharger station for its cars. Some existing chains like 7-Eleven are already installing EV chargers at their locations, but if Tesla expands its concept beyond the L.A. site, it could create a whole new retail category of “charge-and-dine stations,” says Axios. Tesla has not revealed a timeline for the project, but Teslarati suggests that it could be done by the end of the year. (LinkedIn News)

Former Secretary-General of the Commonwealth, Chief Emeka Anyaoku, has called for a new constitution as the path forward for Nigeria, emphasizing its importance in ending the “unprecedented level of divisiveness and declining sense of national unity” plaguing the nation.

Anyaoku made this declaration during his address at the 2023 Convocation Lecture of Afe Babalola University, Ado Ekiti, titled, “Management of Diversity: A Major Challenge to Governance in Pluralistic Countries.”

Anyaoku stressed the need for a governmental system that not only acknowledges Nigeria’s diverse population but is also founded upon a constitution that truly represents the will of the Nigerian people.

“The essence of the new Constitution should, in recognition of the crucial principle of subsidiarity in every successful federation, involve a devolution of powers from the central government to fewer and more viable federating units with strong provisions for inclusive governance at the center and in the regions as was agreed by Nigeria’s founding fathers,” he said.

The former Commonwealth scribe pointed out that Nigeria effectively managed its diversity in the early years of independence when it was perceived as a source of strength and national unity. However, this unity began to erode following military intervention in the country’s governance in January 1966, which led to a change in the existing constitution.

Anyaoku noted that prior to the military intervention, the Nigerian Constitution ensured the security of life and property, fostering a faster pace of economic development in the regions. Healthy competition among regions facilitated rapid development across the nation. Today, Nigeria faces significant challenges, including an “unprecedented level of divisiveness,” declining national unity, economic stagnation, insecurity, poor infrastructure, and ethical decay.

Despite these challenges, Anyaoku expressed his belief in Nigeria’s potential for restoration. He stated, “I believe that Nigeria is still salvageable. The country can still be restored to greater peace, greater security, a renewed sense of national unity, greater political stability, and a more assured pace of economic development.”

To achieve this transformation, Anyaoku urged the federal government to acknowledge the necessity of a new constitution made by the people of Nigeria, rather than continuing to amend the 1999 Constitution.

He recommended the immediate convening of a National Constituent Assembly, consisting of directly elected representatives on a non-party basis. Their task would be to discuss and agree on a new constitution, taking into account the 1963 and 1999 Constitutions, as well as the recommendations of the 2014 national conference.

Anyaoku proposed a timeline for this process, suggesting that the Constituent Assembly be given six months to produce the draft new Constitution. Once agreed upon, the draft constitution should be subject to a national referendum for adoption by a majority of voters, after which it should be signed by the President.

Aare Afe Babalola, the founder of Afe Babalola University, commended Anyaoku for his lecture, noting that it aligned with his long-standing calls for a new constitution to address Nigeria’s challenges. Babalola said that the new constitution should also address the issue of Nigerian leaders viewing politics as a lucrative business rather than a service to the people.

He expressed his belief that a new constitution is the key to achieving the necessary changes in the country, and he highlighted the role of institutions like Afe Babalola University in nurturing leaders who can positively impact Nigeria.

This article talks more about the provisions of the Companies and Allied Matters Act (CAMA) on the topic of transactions by a company involving its own shares, particularly the topics of :

– The Redemption of Redeemable Preference Shares

– Financial assistance by companies for transactions in their own shares

– Payment for share buybacks

– Acquisition by companies of their own shares

Redemption of Redeemable Preference Shares

– The provisions of CAMA 2020 apply with respect to the redemption by a company of any redeemable preference share issued by it.

– The shares are not redeemed unless they are fully paid, and redemption shall be made only out of:

(a) profits of the company which would otherwise be available for dividend ; or

(b) the proceeds of a fresh issue of shares made for the purposes of the redemption.

-Before the shares are redeemed, the premium, if any, payable on redemption, shall be provided for out of the profits of the company or out of

the company’s share premium account.

-Where shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called “the capital redemption reserve account”, a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company.

Prohibition of financial assistance by a company for the acquisition of Its own shares

– Under CAMA 2020:-

(a) “financial assistance” means a gift, guarantee, any form of security or indemnity, a loan or any form of credit or any other financial assistance given by a company, the net assets of which are thereby reduced by up to 50%, or which has no net assets ;

(b) “net assets” means the aggregate of the company’s assets, less the aggregate  ofits liabilities (“liabilities” to include any charges or provision for liabilities in accordance with the applicable accounting standards applied by the company in relation to its accounts).

– Subject to the provisions of this section:

(a) where a person is acquiring or is proposing to acquire shares in a company it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place ; and

(b) where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

– Nothing in of the provisions above shall be taken to prohibit:

(a) the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company ;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fullypaid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company ;

(c) the making by a company of loans to persons, other than directors,bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully-paid shares in the company or its holding company, to be held themselves by way of beneficial ownership ;

(d) any act or transaction otherwise authorised by law including:

(i) a distribution of a company’s assets by way of dividend lawfully made or a distribution made in the course of the company’s winding-up,

(ii) the allotment of bonus shares,

(iii) a reduction of capital confirmed by order of the court under this act, and

(iv) a redemption or purchase of shares ;

(e) anything done in pursuance of an order of the court under a scheme of arrangement ; a scheme of merger or any other scheme or restructuring of a company done with the sanction of the Court ; or

(f ) an assistance given by a company where its principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or the reduction or discharge of any such liability, but an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company.

Acquisition by a Company of its own Shares

-A limited liability company may purchase its own shares including redeemable shares provided that:

(a) a company may only purchase its own shares if so permitted by its articles;

(b) the shareholders shall, by special resolution, approve the acquisition by the company of the shares that it intends to purchase ;

(c) only fully paid up shares of a company may be purchased by the company, and the terms of purchase shall provide for payment for the purchase;

(d) within seven days after the passing of the special resolution referred to in paragraph (b), the company shall cause to be published in two national newspapers, a notice of the proposed purchase by the company of its own shares ;

(e) within 15 days after the publication in two national newspapers, the directors of the company shall make and file with the Commission, a statutory declaration of solvency, to the effect that the company is solvent and can pay its debts as they fall due, and that after the purchase of its shares, the company shall remain solvent and can pay its debts as they fall due ;

(f ) a company may not under this section purchase its shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.

– Within a period of six weeks following the publication in two national newspapers, any of the company’s creditors may make an application to the Court for an order cancelling the resolution and a dissenting shareholder who did not vote in favour of the share buyback shall also have the right to seek an order of court cancelling the resolution.

Payment for Share Buybacks

– Where a company buys back its shares, payment for the share buyback shall be made from the distributable profits of the company.

Persons from who shares can be bought back

-A company may buy back its shares:

(a) from the existing shareholders or security holders on a proportionate basis;

(b) from the existing shareholders in a manner permitted pursuant to a scheme of arrangement sanctioned by the court ;

(c) from the open market ; and

(d) by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or any other similar scheme.

Limit on number of shares acquired

-A company shall not hold more than 15% of the nominal value of the issued share capital of any class of its shares as treasury shares.

-Where a company buys back more than 15% of the issued share capital of any class of its shares, the company shall, before the end of 12 months beginning with the date on which that contravention occurs:

(a) reissue,

(b) cancel, or

(c) reissue and cancel such number of shares that will ensure that the company holds not more than 15% of the issued share capital of any class of its shares as treasury shares upon the completion of the transaction.

– Notwithstanding anything contained under the act, a company shall not exercise any right in respect of the treasury shares (including any right to attend or vote at meetings) and any purported exercise of such a right shall be void.

-No dividend shall be paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding-up) shall be made to the company, in respect of the treasury shares.