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Financial Experts Fault Tesla $1.5b Investment In Bitcoin

Financial experts have faulted the $1.5 billion Tesla’s investment In Bitcoin, urging Tesla to sell the crypto in favour of buying back Tesla stock.

Tesla critics posited that ever since the company bought Bitcoin a month ago, Tesla has been down in value.

Speaking in this regard, an analyst and former CEO of Aegon Asset Management Gary Black tweeted that it would create “positive momentum” if Tesla sold its Bitcoin in favour of buying back Tesla stock.

Coinmarket reports that the debate has stoked the fire that institutional investors have no place putting their assets into cryptocurrencies — an avenue that was always deemed as a risky investment. While Gary Black has stated that it was unlikely Tesla would make such a move, he went on to share his views on Twitter by saying:

“If you asked 100 institutional [Tesla] shareholders would they prefer [Tesla] to invest $1.5B excess cash in [btc], or $1.5B excess cash in Tesla stock, 95/100 would choose [Tesla] stock.”The comments come at a trying time for Tesla, with shares in the electric vehicle maker falling to intraday lows of $557 on Friday… down 10%.

Bitcoin has also yet to recover fully from last week’s losses, closing yesterday at $48,561.17 and currently trading at $47,517.85, which is down 3.6% in the last 24 hours.

Some analysts have said that the Bitcoin price could be affected by the traditional stocks and bonds market, which also took a hit yesterday.

Gary Black isn’t the first financial commentator to criticize Tesla’s decision to buy Bitcoin, as GLJ Research analyst Gordon Johnson stated that he thought it was a sign that the electric car manufacturers had “run out of viable internal uses” of its capital. Gordon Johnson went on to say: 

“TSLA took a large chunk of the cash (i.e., $1.5bn, or ~12.2% of the ~$12bn in equity raised in three offerings in 2020) generated from three secondary equity offerings in 2020, and invested it in a highly volatile and allegedly manipulated cryptocurrency.”

Coinmarketcap

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