Tesla Inc’s TSLA recent Bitcoin BTC/USD sale was made at a small loss, a new report from Arcane Research finds.
What Happened: Arcane’s analysts estimated that Tesla sold 75% of its BTC stack, or 29,060 BTC, at an average price of $32,209 per Bitcoin.
“This estimation is based on previous VWAP estimates from their initial BTC purchase (average price of $34,841) and the sale of 10% of their BTC to “test liquidity” in Q1, 2021,” stated the analysts.
Tesla’s first $1.5 billion Bitcoin purchase was done at an average price of $34,841 per coin. The company then went on to sell a small portion of its holdings in the first quarter of 2021 at an average price of $50,000 per coin.
“Assuming the 10% BTC sold in Q1 was sold at $50,000, Tesla’s new break-even price of BTC was approximately $33,325, meaning that Tesla sold at a small loss,” wrote the analysts in the report.
However, statements from Tesla’s second-quarter earnings call suggest that calculating the extent of this loss may not be so straightforward.
“We converted a majority of our bitcoin holdings to fiat for a realized gain offset by impairment charges on the remainder of our holdings, netting a $106 million cost to the [income statement],” said the company.
In order to realize a gain on the initial investment, the company would have had to sell Bitcoin sometime between April and June 2022. In April, BTC was trading between $37,700 and $47,465.
Tesla noted that any gain it had made on the sale was offset by the impairment loss on the remainder of the company’s holdings.
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Price Action: Tesla shares closed 0.2% higher at $816.73 on Friday, before shedding 0.2% in extended trading, according to data from Benzinga Pro.