Investors lean towards Tesla’s $ 1.5 billion bitcoin waste
Investors of the flying electric car manufacturer Tesla Inc are questioning whether Elon Musk‘s $ 1.5 billion spending on Bitcoin will be good for the company as it is for the cryptocurrency.
Tesla announced on Monday that it was moving about 8 % of its reserves to bitcoin, causing the cryptocurrency to jump to its highest value to date, with an increase of more than 16 percent this week.
But in return, Tesla’s shares fell by almost 6 %
Business leaders similar to the transaction that Tesla initiated, such as Twitter Inc’s finance manager, said in a statement to CNBC that they are considering adding bitcoin to the company’s balance sheet. shareholders expressed their concern about this.
Baker Avenue Wealth Management chief strategist King Lip explained that although he has owned Tesla shares since 2015, “the volatility in stocks will be better for Bitcoin than for Tesla”.
Gary Black, CEO of former Aegon Asset Management, a private investor to Tesla since 2019, announced onTwitter that she was selling Tesla shares on Monday.
The difficulty of valuing the notorious cryptocurrency in the long run was also a source concern for investors.
Peter Garnry, head of equity strategy at Saxo Bank, stated that Elon Musk has exposed Tesla to great market risk. But Tesla remained silent about this comment.
Garnry also wrote that investors with extensive positions at Tesla, such as ARK Invest, are at risk. As it is known, ARK Invest Tesla represents 8.75 % of the flagship of the portfolio.
ARK’s research director, Brett Winton, said Tesla’s bitcoin investment is “an appropriate use of cash” and does not change the company’s view of the automaker.
Brown Advisory’s head of fixed income Tom Graff who owns Tesla’s asset-backed securities linked to the car rental business but does not corpored bonds, said that “ you can not know and understand How easily and quickly bitcoin is convertible into cash, and you get the value.
“If I had an unsecured bond, I would be very upset about it,” Graff said.
Tesla raised cash last year, in part to ease future debt pressures.
Tesla’s CEO Musk holds the majority of unpaid Tesla shares, according to Refinitiv data.
James Anderson, one of Baillie Gifford’s partners, told The Times he was pleased that Tesla bought bitcoin. However, he did not explain how much the company would set a limit on its purchase, and did not clarify questions.
Still, investors at Tesla were rewarded for sticking to one of Wall Street’s most controversial stocks. Shares have increased by 422% in the last 12 months.
For a long time, investors tend to find these purchases positive, thanks to the popularity of Musk’s oversized public personality.
“I’ve been following this company for a long time and … they’re making big decisions right,” said Graham Tanaka, president and chief investment officer of Tanaka Capital Management, which holds Tesla shares.
Investors lean towards Tesla’s $ 1.5 billion bitcoin waste
Source: Yahoo.Finance
You may also like:
Brexit will cost the European Union about half a percent of GDP
