“More background: I arrived in North America at 17 w $2000, a backpack & a suitcase full of books. Paid my own way thru college. Dropped out of Stanford Eng/Phys grad school w $110k in college debt. Created Internet startup w bro & Greg Khouri (love bro & loved Greg, may he RIP)” - Meme Lord
It’s not new but they already spent $ 969 MLN on R&D and $ 2 BN on capital expenditure in nine months ending Sept30: Tesla, Inc. [TSLA] Filings | Quick10K $ 1.5 BN in BITCOIN is better than hodling any hard currency. Tesla had $14.5 BN in cash & equivalents at the end of 3Q '20.
To be most objective, the best argument I’ve read is that if Tesla truly had no use for that $1.5bn (I think they might have) they could have returned that to shareholders and we could have decided whether to buy BTC ourselves. They can claim its just ordinary treasury activity but it clearly isn’t.
I think it is an educated calculation. Putting a small proportion of your cash reserves into BTC for 2021 is a reasonable bet. If they turn that $1.5B into $10B by the end of the year then they will be in a great position for future growth.
Growth in the next few years will be a cash hungry business. This may stop the need for future capital raises.
Tesla (TSLA) blazes another trail by becoming the first non-fintech Fortune 100 company to load up on bitcoin (BTC-USD) — amassing a $1.5 billion stake in January. Its new cryptocurrency investment may be sitting on unrealized gains of over 37%, including an 18% run-up in the price of bitcoin Tuesday morning to $47,000.
According to Yahoo Finance calculations and data, Tesla’s volume-weighted average price in January was $34,200, which we use as a proxy for Tesla’s purchase price of bitcoin. Based on the $47,000 bitcoin price as of 4:30 a.m. ET on Monday, that represents a gain of roughly 37%, or an unrealized profit of $561 million.