Tesla’s refusal to “hodl” Bitcoin (BTC) have resulted in a missed opportunity of over $300 million in profits.
Tesla’s Bitcoin investment strategy so far
Tesla’s initial foray into Bitcoin began in February 2021 with a groundbreaking $1.5 billion investment. At the time, BTC’s price was around $36,000.
Since the first reported BTC balance on Feb. 8, 2021, Tesla’s stock price is down roughly 40% against Bitcoin, specifically:
TSLA vs. BTC: -40.1%BTC vs. USD: +7.39%TSLA vs. USD: -35.7%BTC/USD weekly price chart ft. Tesla’s Bitcoin purchases and sales. Source: TradingView
However, in a surprising turn, Tesla sold about 10% of its holdings in March 2021. Then, in the second quarter of 2022, the company sold approximately 75% of its Bitcoin reserves. As Tesla CEO Elon Musk noted, these sales intended to demonstrate Bitcoin’s liquidity and to bolster Tesla’s balance sheet during uncertain financial periods.
Had Tesla retained its entire Bitcoin investment, the company could have seen a hypothetical profit of over $300 million, considering the current Bitcoin value of approximately $41,500.
Nonetheless, the company’s remaining Bitcoin holdings, estimated at around 9,720 BTC, have remained steady in recent quarters, reflecting a more conservative approach in what traders anticipate to be a bullish year for Bitcoin.
Tesla still holds 9,720 #Bitcoin worth $385m and did not sell anyone Q4, 2023. pic.twitter.com/lFFBy6v9I4
— Radar (@RadarHits) January 25, 2024
Tesla may not sell the remaining Bitcoin
Interestingly, Tesla’s previous Bitcoin sales appeared in the quarters reporting weaker free cash flows. It is the cash that a company generates after spending the money required to maintain or grow its business operations.
For example, in the first quarter of 2021, Tesla’s sale of Bitcoin, valued at $272 million, constituted a staggering 93% of the company’s free cash flows during that period.
Tesla free cash flows performance by quarter. Source: Statista
Similarly, in Q2 2022, Tesla’s 73% reduction in free cash flows coincided with its Bitcoin sales.
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