Tesla's recent decisions regarding Bitcoin have made waves in the market, with the electric car manufacturer making a huge profit as well as a sizable mistake. In February 2021, Tesla purchased $1.50 billion worth of Bitcoin at an average price of $36,000. They then sold a large portion of their holdings when the value of the currency was at its all-time high of $69,000 in November 2021. Tesla then made another sale in the second quarter of 2022, when the value of Bitcoin was around 70% lower, netting them a $64 million profit.

With the same sale, Tesla lost out on potential gains from the currency's rising value, which had risen by more than 50% since their first sale. This resulted in them losing out on a potential $500 million, resulting in them having an unrealized loss of $56.6 million on their remaining Bitcoin holdings. Despite this, their net profit from the two sales still amounts in at around $108 million.

The sales likely came as a result of Tesla's cash crunch, as their free cash flows dropped dramatically. The profits from the first sale made up a whopping 93%, of their free cash flows at the time, and the second sale came as their free cash flows slipped by 73%. This suggests that Elon Musk used Bitcoin as a safe haven during times of financial trouble.

Fortunately, they've managed to avoid taking any similar losses in the near future, as Wall Street analysts estimate that Tesla's free cash flow in Q1/2023 would be substantially higher than previous quarters. This is great news for those who feel confident in the projections of the currency's future.



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