Tesla’s $300M missed Bitcoin profit
Tesla’s decision to sell off its Bitcoin holdings has resulted in a missed opportunity for significant profits. The company made its initial investment of $1.5 billion in Bitcoin in February 2021 when the price was around $36,000. Since then, Tesla’s stock price has dropped by around 40% compared to Bitcoin’s performance.
In a surprising move, Tesla sold about 10% of its Bitcoin holdings in March 2021, followed by selling approximately 75% in Q2 of 2022. According to Tesla CEO Elon Musk, these sales were intended to showcase Bitcoin’s liquidity and strengthen Tesla’s balance sheet during uncertain financial times.
If Tesla had held onto its entire Bitcoin investment, it could have potentially made over $300 million in profits, considering the current value of Bitcoin at around $41,500. The company has chosen to retain a portion of its Bitcoin holdings, estimated at around 9,720 BTC, indicating a more conservative approach.
Interestingly, Tesla’s previous Bitcoin sales coincided with periods of weaker free cash flows, which refers to the cash generated after covering business expenses. For example, in Q1 2021, the sale of Bitcoin accounted for a massive 93% of Tesla’s free cash flows during that period. Similarly, in Q2 2022, Tesla’s Bitcoin sales coincided with a 73% reduction in free cash flows. These sales were a strategic move by Musk to boost finances during cash-strapped periods.
Tesla’s financial situation may have improved, as evident from its increasing free cash flows throughout 2023. In Q4 2023, Tesla’s free cash flow was strong at $2.1 billion, contributing to a total of $4.4 billion for the year. This suggests that Tesla may not need to rely on Bitcoin sales to bolster its finances anymore.
Many analysts are optimistic about Bitcoin’s future value in 2024, citing the potential approval of spot Bitcoin ETFs in the U.S. and the anticipated impact of the upcoming Bitcoin halving event as key factors driving their predictions. These factors may influence Tesla’s decision regarding its remaining Bitcoin holdings.
3 thoughts on “Tesla’s $300M missed Bitcoin profit”
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It’s frustrating to see Tesla sell off its Bitcoin holdings. They could have made millions!
It’s always a risk to sell off your investments too soon, and Tesla seems to have learned that the hard way. 💔💡 Holding onto their Bitcoin could have been a game-changer for their balance sheet.
I can’t believe Tesla didn’t hold onto Bitcoin. They could have made so much more money!