Did tesla's $1.5 billion bitcoin purchase negatively affect their stock price

[TastyChillySauce00]

And there are some who have advised Tesla to dump their Bitcoins in order for the stocks to recover. For me, there are some factors behind the dump of Tesla stocks because of purchasing $1.5 billion worth of Bitcoin. In my opinion, either the whales are “playing the game to buy more at their target discount price” where some Tesla holders are going to panic sell, or there are Tesla stock holders who aren’t fans of Bitcoin and start selling or dumping them because of Tesla’s interest on it. That’s just my opinion though.

Or maybe most of investors just think that with tesla's investment to bitcoin it could add more risk to the company's portfolio. It's all just wild hunch though but I don't think by investing in bitcoin it could ever make Tesla goes bankrupt but I think it's gonna be quite the opposite, remember when spaceX a company of elon musk also deemed to be a huge failure but it turns big rn.

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[Vishnu.Reang]

When the Tesla stock price was going down a few days back, the Bitcoin haters were claiming that it is due to the investment in Bitcoin. And yesterday, the stock price went up by 20% in a single day. So would these people now say that the $120 billion+ increase in the Tesla market cap in 24-hour duration is due to rising exchange rates of Bitcoin? I know that they are not going to agree. Just pointing out the fact that they look for convenient excuses to blame BTC. Tesla stock price was going down because it was overvalued. And yet, some people were blaming BTC for the crash.

[posi]

When the Tesla stock price was going down a few days back, the Bitcoin haters were claiming that it is due to the investment in Bitcoin. And yesterday, the stock price went up by 20% in a single day. So would these people now say that the $120 billion+ increase in the Tesla market cap in 24-hour duration is due to rising exchange rates of Bitcoin? I know that they are not going to agree. Just pointing out the fact that they look for convenient excuses to blame BTC. Tesla stock price was going down because it was overvalued. And yet, some people were blaming BTC for the crash.

This is the nature of human psychology, they are considered to complain or make some excuses when things are not going in a specified way that will please them and more this should be expected from Bitcoin haters (especially those that are not happy with Elon $1.5 Billion investment in Bitcoin).
The truth is that people are always like that but que sera sera.

[aysg76]

This was going to happen because Tesla shares were overpriced due to Musk riding the market accordingly and after his statement of Bitcoin prices his wealth and Tesla share prices both fell drastically pushing him down on second position of richest man in earth.Tesla market cap fell from $864 to $574 billion with stock prices plunging roughly 33%.There is a market trend these days of people blindly investing and then selling in shares and cryptos based on market FUD' s which just happen with Tesla.Moreover Nasdaq was down by 2.3% with Apple, Microsoft shares also down but Tesla faced huge loss.They gained profit from Bitcoin investment and loss from their shares.Wait and watch for the next move.

[bryant.coleman]

This is the nature of human psychology, they are considered to complain or make some excuses when things are not going in a specified way that will please them and more this should be expected from Bitcoin haters (especially those that are not happy with Elon $1.5 Billion investment in Bitcoin).
The truth is that people are always like that but que sera sera.

Tesla's investment was unexpected. No one thought that they would take such a drastic step. Obviously some of the analysts (and banks such as JP Morgan) were very unhappy, as Telsa had gone against their advice. All sort of scare stories were spread in the immediate aftermath. And the crash in Tesla share price was like a shot in the arm for these skeptics. But I guess now most of them have crawled back to their caves.

[sana54210]

I don't think so. The long term effect on the stock price should be positive.

That is the theory anyway, as time goes on the stock will recover and grow. I don't think that the 1.5 billion worth of bitcoin purchase isn't the reason that the prices of Tesla stock is going down, remember those pesky devils called Hedge Fund Managers, Tesla is one of the shorted stocks and they have the money to do those manipulations, I think Elon was vocal about hedge fund dogs shorting their stocks back then, I don't exactly remember the date.

That's exactly the reason, plus it doesn't matter if a stock like Tesla is shorted, I get it when they do it for GameStop because they are not as famous as they used to be and with the Steam and Epic Games and others we are talking about people buying digitally and not going out to buy games at shops, so it made sense to short that stock and people just wanted to make wall street lose money which is why it increased so much in the recent months.

However Tesla is not like that, they can make it drop as much as they can but the reality is that this is a company that is high-tech and better than any other car manufacturer when it comes to electric cars, all others are trying to build hybrid ones and even fully electric ones but none of them are as good as Tesla. So, this company will keep manufacturing cars and will keep selling it a lot as well.

[posi]

This is the nature of human psychology, they are considered to complain or make some excuses when things are not going in a specified way that will please them and more this should be expected from Bitcoin haters (especially those that are not happy with Elon $1.5 Billion investment in Bitcoin).
The truth is that people are always like that but que sera sera.

Tesla's investment was unexpected. No one thought that they would take such a drastic step.

You may be right but I was actually expecting it to happen long ago (I think Tesla investors stance is what delay the decision) ever since Elon claimed to be the new Dogecoin CEO (cause no genuine crypto enthusiast won't invest or support BTC), when Elon asked about how to perform large transactions to bitcoin.

Obviously some of the analysts (and banks such as JP Morgan) were very unhappy, as Telsa had gone against their advice. All sort of scare stories were spread in the immediate aftermath. And the crash in Tesla share price was like a shot in the arm for these skeptics. But I guess now most of them have crawled back to their caves.

Obviously, some centralized organization won't be happy about Tesla investment in Bitcoin but I am not sure if JP Morgan is currently included because I read that they are planning to create cryptocurrency exposure stock investment since they understand the traditional finance investment are losing to digital (crypto) finances.

[CarnagexD]

"Because I'm stupid" -Elon Musk.
Kiddings aside, I don't really think the bitcoin purchase is what ultimately caused the sudden depreciation in Tesla's stock value. Of course it is still at question, but a 1.9B purchase shouldn't be something that could really affect it, at least this quick and sudden.

Now what I really think about this is that the sudden drop in Tesla's stock price is due to the fact that the hype over electric vehicles is slowly dying out, Tesla hadn't released any major news as of yet and we aren't sure when will be the next time we hear from them with a news about the upcoming car that could revolutionize the vehicle industry.

[Sithara007]

Right now, it looks like someone is very disgruntled by Elon Musk’s actions. You must agree, he spent a huge amount of money on buying BTC, and thanks to him BTC jumped very quickly to 50 000. Maybe this didn't coincide with someone’s plans and that person was enough influenced to negative effect on Tesla stock price.

Well.. a lot of people seems to be disgruntled by Elon's actions. But that is not going to matter much. And the news about the BTC purchase by Tesla came at just about the right time. There was a correction in Bitcoin prices from $41,000 to $33,000 and the news of Bitcoin purchase by Tesla took the prices from $33,000 to a new ATH of $58,000. BTW, I don't think that any one individual can influence the Tesla stock price. TSLA is having a market cap of $641 billion, and it is very difficult to manipulate a stock with such a huge market cap.

[Betwrong]

I don't understand how the purchase can negatively affect their stock price, when they received a huge profit from the transaction. The value of the coins purchased by Tesla in January 2021 stands at around $2.5 billion now, which represents a profit of $1 billion. And more importantly, this is more than the profit that Telsa earned by selling their electric vehicles for the entire year of 2020.

That would be so only if Tesla cashed out all their BTC at $50k+, which is hardly the case. Investors fear of the possible crash, and it's no wonder because we keep seeing negative opinions predicting "the burst of the bubble". Overall, institutional demand for Bitcoin wasn't increasing since Tesla's big purchase ... Well, maybe until today(see the latest news), so if Tesla's stock crashing was related to the $1.5 billion buy, then the things can start improving for them from now on.

If they cash out now, then they need to pay a short term capital gains tax of 37% on the gains. That means that out of the $1 billion gain, only $630 million will be going to the company reserves. Anyway, being an institutional investor, I don't think that Tesla has any plan to sell their BTC in the immediate term. They are accumulating the coins for very long-term, possibly for more than 10 years.

I think you are right, they(Tesla) are not day traders, after all. They just did the right move, but few companies have followed. Some people would rather lose money than admit that someone might be smarter than them.

As of Tesla's stock price, it's up by 8% since the OP's posting. I think they'll be alright.

[Vishnu.Reang]

I think you are right, they(Tesla) are not day traders, after all. They just did the right move, but few companies have followed. Some people would rather lose money than admit that someone might be smarter than them.

As of Tesla's stock price, it's up by 8% since the OP's posting. I think they'll be alright.

During the last 18 months, TSLA share price has increased by almost 1500%. That shows the level of confidence that investors are having in this stock. Last time we saw similar P/E ratio was more than two decades ago, during the dot com bubble. Only history will tell whether TSLA is another bubble or not, but the Bitcoin purchase is not going to do any harm to them in the long term. And it doesn't matter what the analysts think about the purchase.

[Betwrong]

I think you are right, they(Tesla) are not day traders, after all. They just did the right move, but few companies have followed. Some people would rather lose money than admit that someone might be smarter than them.

As of Tesla's stock price, it's up by 8% since the OP's posting. I think they'll be alright.

During the last 18 months, TSLA share price has increased by almost 1500%. That shows the level of confidence that investors are having in this stock.

And those investors are right. Clean energy oriented companies is the future, there's no other choice, and while there can be scammers, taking advantage of the situation, Tesla is definitely not one of them.

Last time we saw similar P/E ratio was more than two decades ago, during the dot com bubble. Only history will tell whether TSLA is another bubble or not, but the Bitcoin purchase is not going to do any harm to them in the long term. And it doesn't matter what the analysts think about the purchase.

When they were right, the analysts? They exist only because some people are unable to make decisions by themselves, and they want someone telling them what to do, even if that someone was wrong many times before.

[Myleschetty]

Did tesla's bitcoin investment negatively affect its stock price? Yes, it did.
Despite the fact that cryptocurrency and clean-oriented energy companies are an innovation that will do well in the future a lot of people criticized Tesla billion dollars investment in Bitcoin and I believe may lead to the exit of some TSLA investors who are antiBitcoin.

[eaLiTy]

Tesla's investment was unexpected. No one thought that they would take such a drastic step. Obviously some of the analysts (and banks such as JP Morgan) were very unhappy, as Telsa had gone against their advice. All sort of scare stories were spread in the immediate aftermath. And the crash in Tesla share price was like a shot in the arm for these skeptics. But I guess now most of them have crawled back to their caves.

No one anticipated a billion dollar investment from Tesla but why would JP Morgan be unhappy when they are catering business from cryptocurrency exchanges like Coinbase and they are planning to do business with the cryptocurrency market with their recent launch of crypto exposure basket.

The fluctuation in the price of Tesla stock is not new and if you look in the past two years the market rallied in both directions when Elon Musk says something and we will see the same in the future.

[jaysabi]

That's absolutely not what happened. Board members are insiders and can't just sell their shares without making filings with the SEC about it. Since this didn't happen, we know that this "theory" is 100% wrong. Tesla is pulling back because all tech stocks are pulling back as treasury yields rise. There is an inverse relationship between the 10 year treasury yield and tech stocks.

This is strange. Ideally investors should not fall in to this trap. Bond yields are rising because the government is taking more and more loans to cover the rising federal debt. In absolute terms, the returns may be increasing. But the chances of default is going up and the purchasing power of US Dollar is declining. However, purchasing treasury bonds may be an attractive option in the short term, and I can't blame corporations for going for it.

The US technically can't default on the debt because the Fed will just print as much money as is required to redeem the bonds.  So the risk of default is effectively zero.  The consequence is the dollar becomes devalued, but that's not a default.  Betrayal of the citizens, yes.  Default, no. 

All that aside, tech stocks will still trade inversely to treasury yields because that's just what they do.

[Betwrong]

Did tesla's bitcoin investment negatively affect its stock price? Yes, it did.
Despite the fact that cryptocurrency and clean-oriented energy companies are an innovation that will do well in the future a lot of people criticized Tesla billion dollars investment in Bitcoin and I believe may lead to the exit of some TSLA investors who are antiBitcoin.

But in reality it doesn't look like Tesla is doomed or anything. They are recovering little by little



and even if antiBitcoin investors are leaving them now, it looks like Tesla will perfectly survive without them. I even predict their rejoining the company later, when they become pro-Bitcoin like anybody else.

[jaysabi]

I was expecting to the some positive effect in the stock price of Tesla after buying this huge amount of bitcoins and start investing on it. I'n not into the stocks but maybe the sock price is gonna rise soon hugely because the amount of profit Tesla got after buying the bitcoins is even more than the money they earn for selling their electric vehicles during the entire of the last year. I believe we should the effect on long term after a few years/months.

Tesla hasn't sold their coins, so the profits are "unrealized". So on paper, the profit of $1 billion is there. But as long as it is not realized, this transaction will not be having much impact on the stock prices. Also, $1 billion may sound a lot. But considering the market cap of Tesla, it is a very small amount (less than 0.2% of the market cap). So whatever price movements we are witnessing may not be having anything to do with the BTC purchase.

Unrealized gains absolutely figure into the stock price of a company. Berkshire has a public stock portfolio in the billions of dollars, and the stock price of Berkshire absolutely reflects the unrealized gains and losses of those assets.  It applies to every company.  Microstrategy has unrealized bitcoin gains, and MSTR's stock price rises and falls with the price of bitcoin because of how much they hold.  I agree with you that I don't see Tesla's investment in Bitcoin being enough to significantly move the needle for them when Bitcoin rises or falls, but investors still take into account Tesla's assets when make a valuation decision on the business.

[franky1]

imagine that 'supplychain costs are $1.5m/quarter'
so they have $6bill a year of 'cashflow' to cover those costs for the year

well unable to buy stuff in Q3 means your hanging onto $1.5b that should have been used.
this can cause issues with:
a. seeking 2021 investment. as having cash unspent wont attract people to want to hand more over
b. tax offices will see that $1.5b cash and take a nice bite out of it.

so the smart option.. invest $1.5b into something. so that you can treat it as a tax loss for 2020
yes when you exit the investment in the future you have to declare it as a taxable income. but atleast the amount taken will be less if you then get to spend the $1.5b on supplychain stuff before the end of 2021

yes many smart businesses want to declare losses for tax avoidance. a hit on the share price is less than the hit on the tax bill
share prices can recover. but you cant recover the tax taken

oh and by the way. elon bought btc in december. his primary share holders (board members) knew this..
the share price dip in february. was social drama triggered by a collection of many factors which swayed the smaller share holders away.
it was a combination of
the PUBLIC february news about investment.
the supplychain issues
tesla US cars are recalled due to faulty touch screen
tesla china cars recalled due to battery issues and unintended acceleration
other manufacturers launch their competitive cars

[Shasha80]

Despite the criticism of Tesla for buying $ 1.5 Billion of Bitcoin, I think the main reason for the decline in Tesla's stock price is not because Tesla
bought Bitcoin. Especially after Tesla bought Bitcoin in February, Bitcoin price continues to rise until now. Tesla investors should have known that
Tesla's steps were not wrong. In my opinion, Tesla's stock price has decreased because from the start it was overvalued, we can see that in
the past year, the increase in Tesla's stock price has increased significantly. So I don't agree that what Tesla did by buying Bitcoin had a negative
effect on their stock price.

[Sithara007]

Despite the criticism of Tesla for buying $ 1.5 Billion of Bitcoin, I think the main reason for the decline in Tesla's stock price is not because Tesla
bought Bitcoin. Especially after Tesla bought Bitcoin in February, Bitcoin price continues to rise until now. Tesla investors should have known that
Tesla's steps were not wrong. In my opinion, Tesla's stock price has decreased because from the start it was overvalued, we can see that in
the past year, the increase in Tesla's stock price has increased significantly. So I don't agree that what Tesla did by buying Bitcoin had a negative
effect on their stock price.

If I am not wrong, the net worth of BTC held by Tesla is around $3 billion now, which represents a 100% appreciation from their purchase price in January 2021. It is difficult to quote an exact figure, because Tesla hasn't released those numbers. But we can make assumption based on the date of their purchase. Some of the shareholders are angry, because they think that Elon made this decision (to purchase BTC) without consulting them.