Did tesla's $1.5 billion bitcoin purchase negatively affect their stock price - page 3.

Vishnu.Reang

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Quote from: Leviathan.007 on March 09, 2021, 06:31:24 AM

I was expecting to the some positive effect in the stock price of Tesla after buying this huge amount of bitcoins and start investing on it. I'n not into the stocks but maybe the sock price is gonna rise soon hugely because the amount of profit Tesla got after buying the bitcoins is even more than the money they earn for selling their electric vehicles during the entire of the last year. I believe we should the effect on long term after a few years/months.

Tesla hasn't sold their coins, so the profits are "unrealized". So on paper, the profit of $1 billion is there. But as long as it is not realized, this transaction will not be having much impact on the stock prices. Also, $1 billion may sound a lot. But considering the market cap of Tesla, it is a very small amount (less than 0.2% of the market cap). So whatever price movements we are witnessing may not be having anything to do with the BTC purchase.

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And there are some who have advised Tesla to dump their Bitcoins in order for the stocks to recover. For me, there are some factors behind the dump of Tesla stocks because of purchasing $1.5 billion worth of Bitcoin. In my opinion, either the whales are “playing the game to buy more at their target discount price” where some Tesla holders are going to panic sell, or there are Tesla stock holders who aren’t fans of Bitcoin and start selling or dumping them because of Tesla’s interest on it. That’s just my opinion though.

Leviathan.007

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I was expecting to the some positive effect in the stock price of Tesla after buying this huge amount of bitcoins and start investing on it. I'n not into the stocks but maybe the sock price is gonna rise soon hugely because the amount of profit Tesla got after buying the bitcoins is even more than the money they earn for selling their electric vehicles during the entire of the last year. I believe we should the effect on long term after a few years/months.

bryant.coleman

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Quote from: poodle63 on March 08, 2021, 06:32:44 AM

I honestly think it's just the investors' way of thinking that bitcoin could somehow add some major risk to the company but honestly that doesn't make sense and doesn't feel like an adequate reasoning for their dumping.
If buying btc is truly their reason of dumping tesla stocks massively then they better off withdrawing all their investment from tesla any way, a company like tesla that's high tech should also try out some advanced technology like blockchain otherwise they won't get ahead.

The recent fall in Tesla stock price has nothing to do with the Bitcoin purchase. Tesla was overpriced as hell (it is still over priced at current P/E levels) and it doesn't surprise me that the price fell. In fact I wonder why the prices didn't fell earlier. The immediate reason why the stock prices fall may be due to the entry of new competitors to Tesla in the EV sector. Also, there are announcements made by some of the well known vehicle manufacturers regarding entry in to the EV sector.

poodle63

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I honestly think it's just the investors' way of thinking that bitcoin could somehow add some major risk to the company but honestly that doesn't make sense and doesn't feel like an adequate reasoning for their dumping.
If buying btc is truly their reason of dumping tesla stocks massively then they better off withdrawing all their investment from tesla any way, a company like tesla that's high tech should also try out some advanced technology like blockchain otherwise they won't get ahead.

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Quote from: jaysabi on March 07, 2021, 07:18:05 PM

That's absolutely not what happened. Board members are insiders and can't just sell their shares without making filings with the SEC about it. Since this didn't happen, we know that this "theory" is 100% wrong. Tesla is pulling back because all tech stocks are pulling back as treasury yields rise. There is an inverse relationship between the 10 year treasury yield and tech stocks.

This is strange. Ideally investors should not fall in to this trap. Bond yields are rising because the government is taking more and more loans to cover the rising federal debt. In absolute terms, the returns may be increasing. But the chances of default is going up and the purchasing power of US Dollar is declining. However, purchasing treasury bonds may be an attractive option in the short term, and I can't blame corporations for going for it.

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Quote from: Theb on March 07, 2021, 10:41:38 AM

There are a lot of things to consider here but ruling out several factors like Tesla was doing good financially and they were just recently at their ATH my bet is on that there is a group of stockholders/board members that expressed their opposition against their cash reserves being invested in Bitcoin when they weren't heard from it they just simply sold off their shares, but don't quote me on this one I'm just giving you some possibilities on why a financially well performing company is suddenly going down in value. If we rule out the controversy and all chances are people just took the profit that's why Tesla shares are doing down and this is common on stocks that are up on their ATH same as cryptocurrencies.

That's absolutely not what happened. Board members are insiders and can't just sell their shares without making filings with the SEC about it. Since this didn't happen, we know that this "theory" is 100% wrong. Tesla is pulling back because all tech stocks are pulling back as treasury yields rise. There is an inverse relationship between the 10 year treasury yield and tech stocks.

bryant.coleman

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Quote from: Theb on March 07, 2021, 10:41:38 AM

There are a lot of things to consider here but ruling out several factors like Tesla was doing good financially and they were just recently at their ATH my bet is on that there is a group of stockholders/board members that expressed their opposition against their cash reserves being invested in Bitcoin when they weren't heard from it they just simply sold off their shares, but don't quote me on this one I'm just giving you some possibilities on why a financially well performing company is suddenly going down in value. If we rule out the controversy and all chances are people just took the profit that's why Tesla shares are doing down and this is common on stocks that are up on their ATH same as cryptocurrencies.

That can be one of the possibilities. But let's not forget the fact that a few months before, Elon himself claimed that the Tesla stocks are overpriced. That probably did more damage than any of the other factors. There may be other factors in play as well. Joe Biden has taken some controversial steps ever since he took office. That might have had an impact on the stock market, and specifically on overpriced stocks such as TSLA.

Theb

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There are a lot of things to consider here but ruling out several factors like Tesla was doing good financially and they were just recently at their ATH my bet is on that there is a group of stockholders/board members that expressed their opposition against their cash reserves being invested in Bitcoin when they weren't heard from it they just simply sold off their shares, but don't quote me on this one I'm just giving you some possibilities on why a financially well performing company is suddenly going down in value. If we rule out the controversy and all chances are people just took the profit that's why Tesla shares are doing down and this is common on stocks that are up on their ATH same as cryptocurrencies.

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Quote from: Sithara007 on March 04, 2021, 11:01:08 PM

I don't understand how the purchase can negatively affect their stock price, when they received a huge profit from the transaction. The value of the coins purchased by Tesla in January 2021 stands at around $2.5 billion now, which represents a profit of $1 billion. And more importantly, this is more than the profit that Telsa earned by selling their electric vehicles for the entire year of 2020.

I know it's stupid but for some investors their pride and stubbornness is more important than common sense. If I saw that a CEO of a company that I'm holding can thing outside the box, I'd be even more confident. I'm a guy who likes to see positive numbers, no matter where they come from. I'm not a guy who would judge a company based on whether they portray themselves environmentally friendly or not, but I can understand why a clean energy freak who spent 100k USD on his electric car and another 100k on solar panels would feel betrayed by Elon who is now investing in Bitcoin. People are strange and irrational most of the time so a bold move like that could scare them.

el kaka22

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Stock prices technically move like bitcoin as well, it is all about supply and demand which means if people do not want the stock they can sell and if they like it they can buy it, the only difference is that it is a company and makes a profit or a loss so you should probably know about what is going on with the finances of it and that is why there is a calculation and valuation of that company.

Moreover, if I was guessing I would say this is why it could be going down after they bought and the price of bitcoin dropped at the same time as well which made people sell it I suppose. However the company itself makes absolutely no problem at all and that is why I believe the fall is not forever since it would be easy to see that company is not making any loss at all.

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Quote from: Hydrogen on March 05, 2021, 08:01:12 PM

Quote from: Darker45 on March 04, 2021, 10:05:38 PM

Around a billion in profit was already registered from its Bitcoin investment after only a relatively short period of time. And it appears Tesla has made more profit from its Bitcoin investment than from its 2020 EV car sales. ^[1]

[1] https://www.cnbc.com/2021/02/22/tesla-has-made-1-billion-profit-on-its-bitcoin-investment-analyst.html#:~:text=Menu-,Tesla%20has%20made%20about%20%241%20billion%20in,its%20bitcoin%20investment%2C%20analyst%20estimates&text=Tesla%20has%20made%20roughly%20%241,analyst%20at%20Wedbush%20Securities%20estimated.

Tesla made a bigger profit buying bitcoin than the profit made from their entire operation. Hilarious!

Reminds me of space x venturing into the satellite internet business (starlink) when they realized satellite ISPs have bigger profit margins than space x itself did.

Quote from: jaysabi on March 05, 2021, 01:13:51 AM

Tesla's stock decline is because the company was insanely overvalued to the point of absurdity. It's valued like it's going to be the only company that ever produces electric vehicles. Once you dispel that notion as obviously wrong, it's easy to see how overvalued the company is. Aside from valuation, all tech stocks are getting hammered as treasury yields rise right now. That's not specific to Tesla, it's pretty much across the board. I wouldn't say that Tesla buying bitcoin is why it's down, but the sideshow it creates isn't doing the company any favors.

I think tesla's stock value surged after their recent presentation unveiling new technology scheduled to be rolled out in 2022. They plan to license their new EV technology to global automakers in addition to utilizing it in house. They may also have a tesla EV they plan to market at $20k to $30k in 2022. Which could represent the price range many would like to buy a tesla but previously couldn't afford it. There is also the tesla cybertruck which is due out in 2022.

One thing you gotta keep in mind about Tesla is Elon's loooong history of over promising and under delivering on those promises. Promising Tesla would never need to raise capital again, then doing secondary issues; missing production targets regularly; battery day letdowns; "shatterproof" cyber truck windows, etc. And on the cybertruck, Ill be shocked if that thing actually sells well. It's ugly as sin and I don't see that many people into the aesthetics of that truck. It was buzz worthy because of how weird it looked, not convinced that will translate into robust sales.

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Quote from: The Sceptical Chymist on March 06, 2021, 08:10:21 PM

Quote from: Darker45 on March 04, 2021, 10:05:38 PM

Apparently, there were criticisms against Tesla for buying more than a billion USD worth of Bitcoin.

But just based on that graph (which is a very short timeline), I'm not completely convinced that Tesla's bitcoin purchase is responsible for their stock price dipping. The entire market is overvalued right now, and I'm kind of surprised that more stocks aren't starting to slide. Plus, as we all know, correlation doesn't mean causation.

Oh yeah, of course, at times correlation reflects nothing but coincidence. And, yes, I guess a huge portion of Tesla's overall stock movement is simply brought about by the larger sentiment of the entire market. Furthermore, just like "the entire market is overvalued right now," I'm afraid so are Tesla cars.

However, it cannot be denied that Tesla's Bitcoin purchase has contributed to its negative movement in the stock market. Some investors have actually openly voiced over their disappointment over Tesla's Bitcoin purchase, along with their decision to sell their shares of the company.

But, on the other hand, it is my observation that things were exaggerated a lot when business/finance articles seem to solely attributed Tesla's negative movement in stocks to its decision to purchase Bitcoin. That to me is nonsense. Just like when an analyst advised that "Tesla should sell its Bitcoin and buy back shares to create 'Positive Momentum.'"^[1] I think they're just firing out one criticism after another purely out of spite of Bitcoin. I mean, they're just salty! Zzzzz.

[1] https://finance.yahoo.com/news/tesla-sell-bitcoin-buy-back-050117982.html

LUCKMCFLY

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Currently Tesla shares have fallen at the same time as the correction of Bitcoin, some blame him for having said on twitter that Bitcoin and eth had their price very high, about approximately 27 billion dollars have calculated the losses of Elon Musk, but I think it must withstand this storm, because a new Bitcoin pump may come, anything is possible.

But still, he is still the 2nd richest in the world according to Bloomberg.

danherbias07

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Had he been busy talking too much about cryptocurrencies and forgot about his company investors. Grin

There may be a chance that some did pull out because of what he did.
And it cost him this negative effect for their stock price.
I think he foresaw this to happen also and was prepared for the consequences.
His financial advisors might have given him all the opinions about it and somehow it will all be realized in the future.

Xinarae*

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Tesla has long been a favorable target for investors who seek to benefit from falling stock prices. If successful short sellers can make the difference between selling and buying prices but the recent incident with video game retailer shares such as rising share prices could also be a serious mistake for businesses bitcoin business is also on the rise their net worth has also increased and decreased with the recent bitcoin prices. Tesla revealed last month that its cryptocurrency revenue on its balance sheet was $ 1.5 billion fortune hit 15 billion just two weeks later he then said on twitter that the price of bitcoin and other cryptocurrencies seemed to be higher.

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Quote from: magneto on March 06, 2021, 08:31:13 PM

I honestly don't think that is the case.

BTC prices have only moved in the positive direction since Tesla's announcement. It makes no sense for that portion of Tesla's $1.5b holdings (which is minuscule compared to their half a trillion market cap) would result in a 30% correction in their common stock.

I think people are just starting to realise that Tesla is insanely overvalued right now with a P/E ratio of nearly 1000 (for context, average P/E is usually about 20, overvalued is around 30). There is simply no stable cash flow to justify this absurd rally.

Tesla is heavily overvalued and there is no doubt about it. One year back, the stock was trading at around $100, and by this January the prices had increased to $880. The stock price increased by almost 9 times, but there was no similar increase in the revenue or net profit. At one point, Tesla had a P/E close to 1,700 which is perhaps the maximum level for any stock with a market cap above $10 billion.

magneto

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I honestly don't think that is the case.

BTC prices have only moved in the positive direction since Tesla's announcement. It makes no sense for that portion of Tesla's $1.5b holdings (which is minuscule compared to their half a trillion market cap) would result in a 30% correction in their common stock.

I think people are just starting to realise that Tesla is insanely overvalued right now with a P/E ratio of nearly 1000 (for context, average P/E is usually about 20, overvalued is around 30). There is simply no stable cash flow to justify this absurd rally.

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Quote from: Darker45 on March 04, 2021, 10:05:38 PM

Apparently, there were criticisms against Tesla for buying more than a billion USD worth of Bitcoin.

No doubt, and it seems like there's a huge difference between Tesla investors and MicroStrategy investors--the latter seem to like the fact that their company purchased a massive amount of bitcoin.

But just based on that graph (which is a very short timeline), I'm not completely convinced that Tesla's bitcoin purchase is responsible for their stock price dipping. The entire market is overvalued right now, and I'm kind of surprised that more stocks aren't starting to slide. Plus, as we all know, correlation doesn't mean causation.

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Quote from: Sithara007 on March 05, 2021, 10:35:37 PM

Right now, the cars from Tesla costs at least 4-5 times that of a gasoline-run vehicle with the same specs.

Teslas do 0 to 60 mph performance times ranging from 2.5 seconds to 4 seconds. Teslas are faster than supercars like ferraris and lamborghinis which are far more expensive.

Teslas offer supercar performance in an EV with quality craftsmanship and dependability on top of high fuel efficiency, while being good for the environment and helping end dependance on fossil fuels. Futuristic extras like AI autopilot technology -- definitely a plus. On paper analysts trend towards looking only at price and range, which prevents them from seeing the big picture.

I watched presentations on tesla's planned tech unveilings for 2022 and have to say they're impressive. Could be game changing for EV markets and battery manufacturing. They managed to reduce if not eliminate dependance on cobalt for their batteries which was one area EVs were criticized for due to cobalt mining industries being dependant upon child and slave labor in africa.

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