Tesla Loses More Than $500 Million From Bitcoin Crash — Is Your Investment Safe?

Mandatory Credit: Photo by Patrick Pleul/AP/Shutterstock (12861811m)Elon Musk, Tesla CEO, attends the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, .
Patrick Pleul/AP/Shutterstock / Patrick Pleul/AP/Shutterstock

It’s not like Tesla shareholders needed another reason to worry about their investment, considering the electric vehicle maker’s slumping stock price and uncertain business outlook. Now comes word that Tesla has lost more than $500 million in value from its bitcoin investment during the current “crypto winter.”

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The news was reported on Wednesday by Electrek, a site devoted to all things Tesla. Electrek based the figure on Tesla’s $1.5 billion investment in bitcoin in early 2021 — a number that eventually grew to $2 billion.

How did the investment lose so much value in less than two years? Simply put: Bitcoin’s price has tanked in a big way of late amid a widespread slump in the crypto industry. Bitcoin’s price hovered near $20,000 this week — its lowest level since Dec. 2020 and 70% off its high set in Nov. 2021, CNBC reported.

For Tesla, it means a loss of nearly $600 million in value from its bitcoin investment. But as Electrek noted, that loss still represents only 10% of Tesla’s cash position and 0.1% of its total market capitalization.

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Tesla to Implement Price Hikes

Of bigger concern to investors are reports that Tesla will implement across-the-board price hikes for its U.S. models, The Street reported. This indicates that the automaker is facing rising costs for labor and raw materials that could cut into its near-term profit margins.

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In April, Tesla told investors that “the inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible.”

Shareholders might also be uneasy about Tesla CEO Elon Musk’s tumultuous bid to buy Twitter for $44 billion. Musk was scheduled to meet with Twitter staff this week in San Francisco.

Tesla Shares Trending Downward

Meanwhile, Tesla shares continue to head south, falling about 6% in early trading on June 16. The stock has lost more than 40% of its value since the beginning of the year, something that has Wall Street more than a little concerned.

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Analysts who follow Tesla have an average rating of 2.4 on the stock, putting it slightly in “buy” territory but moving closer to “hold” territory. More than half of the 23 analysts cited by Yahoo Finance have a “hold” or “underperform” rating on the stock.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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