Analysis Investors Lukewarm on Teslas 1.5B BTC Splurge

Investors in highflying electric carmaker Tesla Inc are questioning whether Elon Musks 1.5 billion outlay into bitcoin will be as good for the company as it has been for the cryptocurrency.

Teslas disclosure on Monday that it had moved nearly 8 of its reserves into bitcoin sent the price of the cryptocurrency to alltime highs, up more than 16 this week, while Teslas shares are down nearly 6. Others may follow Teslas lead, with Twitter Incs chief financial officer telling CNBC that the company has considered adding bitcoin to its balance sheet.

Shareholders voiced concern that the investment by Tesla, which recently joined the benchmark SP 500 stock index, could fuel more gyrations in the companys shares.

It will add volatility to the stock due to exposure to bitcoin, said King Lip, chief strategist at Baker Avenue Wealth Management, whose firm has owned Tesla shares since 2015. This is better for bitcoin than it is for Tesla.

Gary Black, former chief executive of Aegon Asset Management and now a private investor who has been bullish on Tesla since 2019, on Monday announced on Twitter that he had sold his Tesla shares. He cited the absence of a 2021 delivery target and the company39;s riskier capital allocation strategy, among other reasons.

Black also tweeted on Monday TSLA has always been higher risk, but investing 1.5B in Bitcoin makes it more risky. He did not respond to a request for comment.

The difficulty of valuing the notoriously volatile cryptocurrency…

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