Tesla Inc (NASDAQ: TSLA) could create a “positive momentum” if its sold its Bitcoin (CRYPTO: BTC) holdings and initiated a buyback of its stock, according to Gary Black, a private investor and former CEO of Aegon Asset Management.
“Imagine the positive momentum Tesla would create if they announced the sale of their Bitcoin position, and authorized a stock buyback instead.”, tweeted Black.
Black acknowledged that the prospect was “unlikely” but shareholders would support such a move.
To Black, Investors who say Bitcoin 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. Bitcoin has ~20% risk, further out on the risk curve than almost any other asset class, Black added.
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.
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.
Tesla had purchased .5 billion worth of BTC in February, amid increased institutional support for the cryptocurrency.
Jack Dorsey-led Square Inc (NASDAQ: SQ) and Tesla combined have spent over 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 (NASDAQ: 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.
Tesla shares fell 3.43% in after-hours trading on Thursday to $600.10 after closing 4.86% lower at $621.44.