The worth of Bitcoin (BTC) is up greater than 50% since Tesla introduced its roughly $1 billion in BTC gross sales in July 2022.
Are Tesla’s Bitcoin Trades Profitable?
Tesla offloaded almost $936 million of its whole bitcoin holdings in Q2 2022, accounting for 75% of its remaining reserves, to safe a $64 million revenue. On the time, Bitcoin was trading about 70% under its all-time high of $69,000 in November 2021.
Month-to-month BTC/USD worth chart displaying Tesla’s buys and sells bitcoin gross sales. Supply: TradingView
Tesla initially purchased $1.50 billion value of Bitcoin in February 2021 at a median worth of $36,000. The corporate then bought $272 million value of BTC so as to add $101 million to its stability sheet for Q1 2021.
The corporate has nonetheless held on to its remaining BTC as of the fourth quarter of 2022, despite the fact that Bitcoin’s worth was at bear-market lows of round $16,000 on the time. As we speak, Tesla holds 10,725 BTC value roughly $330 million, down almost 15% from February 2021 sourcing value.
General, Tesla made roughly $165 million in revenue from two separate bitcoin gross sales. On April 12, it’s sitting on an unrealized lack of round $56.6 million on its remaining BTC holdings. Internet revenue so far is round $108 million.
Will Tesla Promote Remaining BTC Holdings?
Apparently, Tesla’s earlier bitcoin gross sales stemmed from weaker free money flows. For instance, the $272 million BTC sale in Q1 2021 accounted for almost 93% of Tesla’s free money circulate for a similar quarter.
Tesla free money circulate efficiency by quarter. Supply: Statistics
Likewise, Tesla’s bitcoin gross sales got here within the second quarter of 2022, when free money circulate fell 73% sequentially. Each gross sales recommend that Musk has relied on Bitcoin as a protected haven throughout Tesla’s durations of liquidity crunch.
Tesla’s CEO defined on the time that the sale was made to “show Bitcoin’s liquidity as an alternative choice to holding money on a stability sheet.”
In the meantime, Wall Avenue analysts estimated that Tesla’s free money circulate could be almost $2 billion within the first quarter of 2023, up 40% sequentially. This could cut back the probability of Tesla dumping a major quantity of bitcoin within the close to time period.
This text doesn’t include any funding recommendation or advice. Each funding and trading transfer includes threat and readers ought to do their very own analysis when making a call.