Gary Black, former investment director of Goldman Sachs, closed a long position in Tesla stock. His decision was influenced by the investment of the electric car manufacturer in Bitcoin.
Disclosure: I have exited my $TSLA positions after being long since August 2019. The absence of clear FY’21 delivery guidance, increased odds of a 1Q miss, and a more risky capital allocation policy/higher earnings variability were the primary factors.
— Gary Black (@garyblack00) February 8, 2021
Black has held shares in a Nasdaq-listed company (ticker TSLA) since August 2019. According to him, over the past 18 months, these investments have brought “a lot of money”, and he intends reopen a long position at a lower rate.
$TSLA has always been higher risk, but investing $1.5B in #Bitcoin makes it more risky:
1 / Missed 1Q non-GAAP EPS, is by 25% (vs. $ .80 to $ 1.03)
2/ Didn’t give FY’21 deliv guidance, and instead reiterated 50% L/T vol growth goal
3/ 4Q EV share (19.6%) and Auto GM % disappointing— Gary Black (@garyblack00) February 8, 2021
“TSLA has always been a high-risk investment, but buying Bitcoin for $ 1.5 billion makes it even more risky,” Black wrote.
The investor made the decision to sell shares due to the lack of clear guidance on plans for the 2021 fiscal year, increased chances of not meeting targets in the first quarter and more risky capital allocation.
2/ I go back to my criticism of $TSLA earnings calls, which already stood out for their vagueness, lack of detail, and non-discussion of strategic priorities. If $TSLA purchased $1.5B in #bitcoin in January, why not share the logic with shareholders on the earnings call?
— Gary Black (@garyblack00) February 8, 2021
“If Tesla bought $ 1.5 billion in Bitcoin in January, why not share the logic during a conference with investors? ”Black asked.
On February 8, Elon Musk’s company announced its investment in bitcoin. The first cryptocurrency rate reacted with growth to a new all-time high above $ 44,000.
Recall that the ex-head of the Office of the Comptroller of the Currency (OCC) under the US Treasury Brian Brooks called Tesla’s investment in bitcoin exciting and frightening at the same time.
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