Tesla Should Sell Its Bitcoin and Buy Back Shares To Create 'Positive Momentum,' Says Analyst

Tesla Inc TSLA could create a “positive momentum” if its sold its Bitcoin BTC/USD holdings and initiated a buyback of its stock, according to Gary Black, a private investor and former CEO of Aegon Asset Management.

What Happened: Black aired his views on social media Thursday in a series of tweets.

“Imagine the positive momentum [Tesla] would create if they announced the sale of their [Bitcoin] position, and authorized a [Tesla] stock buyback instead.” wrote Black.

See also: How to Invest in Tesla Stock

The investor acknowledged that the prospect was “unlikely” but shareholders would support such a move.

Investors who say #btc has less risk than govt bonds or gold haven’t done their research. Govt bonds have ~2% risk, defined as monthly volatility of returns. Gold ~3% risk. US equities ~6% risk. #btc has ~20% risk, further out on the risk curve than almost any other asset class. pic.twitter.com/OjMyWYU0Oa

— Gary Black (@garyblack00) March 4, 2021

According to Black, if you asked 100 institutional investors in the Elon Musk-led company if they would prefer to invest $1.5 billion of excess cash in BTC or in Tesla stock, 95/100 would choose the stock.

Why It Matters: Black isn’t the only analyst crying foul over Tesla’s investment in BTC. Last month, GLJ Research analyst Gordon Johnson said the automaker had “run out of viable internal uses” of its capital. 

“We see this as a sign of desperation from a CEO whose company is facing real competition for the first time ever,” wrote Johnson.

Tesla had purchased $1.5 billion worth of BTC in February, amid increased institutional support for the cryptocurrency.

Jack Dorsey-led Square Inc SQ and Tesla combined have spent over $3 billion to buy 151,919 BTC. Those coins are worth almost $7.19 billion as of press time when BTC traded 6.99% lower at $47,347.62.

MicroStrategy Incorporated MSTR meanwhile holds 90,531 BTC, purchased at an average price of $2.171 billion, as of late February now worth about almost $4.286 billion.

Price Action: Tesla shares fell 3.43% in after-hours trading on Thursday to $600.10 after closing 4.86% lower at $621.44.

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