In comparison to Bitcoin’s performance, Tesla’s stock price has fallen by almost 40% since the company’s first Bitcoin balance was revealed on February 8, 2021.
Tesla missed out on more than $300 million in profit potential because it decided to sell its Bitcoin holdings. When Bitcoin was about $36,000 in February 2021, the electric car firm made history by investing $1.5 billion, launching its foray into the cryptocurrency market.
In comparison to Bitcoin’s performance, Tesla’s stock price has fallen by almost 40% since the company’s first Bitcoin balance was revealed on February 8, 2021.
In particular, compared to Bitcoin (BTC), whose value has increased by 7.39% vs. the US dollar, Tesla’s stock (TSLA) has underperformed by 40.1%.
When Tesla sold around 10% of its Bitcoin holdings in March 2021 and about 75% in the second quarter of 2022, the company’s strategy took an unexpected turn.
These transactions, according to Tesla CEO Elon Musk, were an effort to demonstrate Bitcoin’s liquidity and fortify Tesla’s financial position in these difficult times.
Given Bitcoin’s current worth of roughly $41,500, had Tesla kept all of its Bitcoin investment, it might have made more than $300 million.
In recent quarters, Tesla has kept its residual Bitcoin holdings, which are estimated at about 9,720 BTC, indicating a more cautious approach in preparation for a positive year for Bitcoin.
Oddly enough, Tesla’s free cash flows—the amount of money left over after paying for operating expenses—were lower in periods when the business sold Bitcoin. For instance, the $272 million Bitcoin transaction generated a whopping 93% of Tesla’s free cash flows in the first quarter of 2021.
Similarly, the 73% decline in free cash flows in Q2 2022 was in sync with Tesla’s sales of Bitcoin. It would seem that Musk used Bitcoin as a crutch when Tesla was strapped for cash.
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