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Tesla Stock is Down 28% Since Buying Bitcoin

The shares of the electric automaker, Tesla Inc are nosediving since the Wall Street giant placed its bet on Bitcoin (BTC) earlier in February 2021.

For a stock market that responds to impulsive news, investors at first appear bullish on the news, pushing the company’s stock to new highs, in what seems the move was welcomed. However, the month-long performance of the company is saying otherwise.

Buying Bitcoin has proven to benefit publicly listed firms like MicroStrategy Incorporated, whose shares have surged from $138.82 back in September 2020 before the company’s Bitcoin buying spree took a new momentum, to a peak of $1,272.94 in February 2021, a growth of over 800%. Tesla’s case is however different, the firm has lost 28% of its stock value since making the BTC bet, a development that questions whether the move was the right one or not.

What This Could Mean: The Two Sides of The Coin

The falling shares of Tesla should give everyone concern, as it generally implies that the bet on Bitcoin is bringing bad fortune. This school of thought is being shared by some, including Bitcoin critic Peter Schiff. Coincidentally, the fall in Tesla shares is coming at a time when Bitcoin’s price is also seeing a retracement, with a drop of 4.19% to $47,246.86 at the time of writing according to CoinMarketCap.

On the other hand, some core Bitcoin advocates believe the falling Tesla shares is a call on the company to double its Bitcoin investments, as it appears that the $1.5 billion bets, representing just about 0.3% of the company’s market cap are too small to allocate to the digital currency.

Whichever the school of thought is right, a continuous fall in Tesla’s shares will not in any way help the institutional perception of Bitcoin, a situation that the crypto space does not need.

MicroStrategy Plans to Increase BTC Holding by Selling Class A Shares Worth $500m

MicroStrategy Inc plans to increase its bitcoin holdings through the net proceeds of its sale of up to $500 million worth of its class A shares.

The Tysons business software firm indicated their plan in September 9 filings with the Securities and Exchange Commission. It disclosed a sales deal with Cowen and Company LLC and BTIG LLC to sell those shares from “time to time.”

SEC filings say the proceeds will be used for “general corporate purposes, including the acquisition of bitcoin.”

According to the company, the new stock sale deal will not require MicroStrategy to issue any minimum offering amount. It further indicated in public filings that it expects to spend some of the proceeds on bitcoin purchases, but it did not make any promises about holding onto those purchases.

“We expect to purchase additional bitcoin in future periods, including with the net proceeds from this offering,” the company wrote.

The firm “may also sell bitcoin in future periods as needed to generate cash and cash equivalents and short-term investments for treasury management purposes,” the company wrote.

As of September 8, MicroStrategy held 129,699 bitcoins, whose market value at the time was worth well north of $2 billion.

The move has come a month after Michael Saylor – founder and Chairman of MicroStrategy – decided to step down as CEO.

However, the company’s stock price is heavily affected by the rise and fall of the bitcoin price. The company has lost more than half its value since the beginning of the year — it stood at roughly $223 as of 3:00 pm Wednesday.

It is unknown how many bitcoin purchases the company has made since the end of June. However, it reported to the SEC that it had spent $10 million to buy 480 bitcoins between May 3 and June 28 – a small buy by the company’s standards.

In the first six months of 2021, MicroStrategy spent $1.6 billion to buy 34,616 bitcoins. According to SEC filings, the company purchased only 5,308 bitcoins in the first half of 2022.

The company has been looking to increase capital for bitcoin purchases over the past two years. In March 2022, a MicroStrategy subsidiary formed specifically to hold most of its bitcoin took on a $205 million loan to finance more purchases.

The company previously funded its bitcoin purchases with $1 billion in stock sales per an open-market sale agreement made in June 2021 with New York investment bank Jefferies LLC.

The total revenue of MicroStrategy for the second quarter of 2022 was $122.1 million – a decrease from $125.4 million during the same quarter a year earlier.

While the company recorded a net loss of $1.2 billion compared to $409.4 million during the second quarter of 2021.

Argo Blockchain IPO: Lawsuit Claims Miner Made Untrue Statements

During the selling phase of the initial public offering (IPO), which took place in 2021, investors in the cryptocurrency mining firm Argo Blockchain have launched a class-action complaint against the miner. The investors accuse the miner of making deceptive promises and omitting essential facts in their complaint. The investors claim that the miner purposefully deceived them in their dealings with him. According to the allegations that have been levelled against the miner in this scenario, the miner is said to have acted in such a way on purpose with the intention of misleading prospective investors.

Argo was the target of a fresh new legal action that was initiated on January 26. In addition to important staff members, the lawsuit counts as defendants a considerable number of directors on the company’s board of directors as well as other employees. It is alleged that the corporation did not provide an explanation as to the extent to which it was susceptible to difficulties such as network connection, financial restrictions, and the cost of electricity.

In the lawsuit, it was alleged that the offering papers were drafted in a sloppy manner, and as a consequence, they contained inaccurate representations of important facts or failed to give additional information that was essential to ensure that the assertions made did not mislead anyone. In addition, it was alleged that the offering papers contained representations of important facts that were inaccurate, and as a result, the lawsuit was filed. The corporation that was sued is the one that was responsible for putting out the offering papers. In addition to this, it was stated that the offering materials included deceptive assertions of key facts with the goal of deceiving potential investors.

Block's Cash App Bitcoin Revenue Falls 7%

The Cash App business section of Jack Dorsey’s payment startup, Block Inc., reported Bitcoin (BTC) revenue of $1.83 billion in the fourth quarter, which is a 7% decrease from the same period last year.

Block attributed the reduction in Bitcoin income to the decline in the price of BTC during the year, which was reported in its quarterly and full-year results on February 23. Bitcoin’s price dropped by nearly 65 percent throughout the course of 2022.

Due to the decrease in sales, Cash App’s Bitcoin gross profit decreased by 25% year-on-year, coming in at $35 million for the quarter. This was the lowest quarterly total since the company began reporting Bitcoin earnings.

Block’s Cash App is an application for processing payments made using mobile phones. On October 25th, functionality for transactions made via the Bitcoin Lightning Network was enabled to Cash App. It does this by offering Bitcoin sales to its consumers via the app, which brings in money.

In the entire year of 2022, Cash App made $7.11 billion in Bitcoin revenue and $156 million in Bitcoin gross profit, representing decreases of 29% and 28%, respectively, when compared to 2021’s figures.

In the meanwhile, Block Inc. reported a significantly increased net loss for the quarter, coming in at $114 million. This is compared to a loss of $77 million in 2021. When compared to the same period of the previous year, its adjusted profits before interest, tax, depreciation, and amortization (EBITDA) rose to $281 million, or a 53% rise. The aggregate amount of revenue during the period was $4.65 billion.

Following the release of the results report, the after-hours trading of Block’s shares resulted in a significant price increase.

The increase in the company’s gross profit, which was up 40% in Q4 compared to the same period the previous year and also above expert estimates, has been ascribed by some analysts to the surge in revenue.

ARK Invest Buys Coinbase Shares Despite Wells Notice

Two days previous to the announcement that the Wells notification was forthcoming, ARK Invest had already sold 160,887 of its Coinbase shares using the ARK Fintech Innovation ETF. When this transaction took place in 2023, it was the first time that any of ARK Invest’s ETFs had sold Coinbase shares. In spite of the decline in Coinbase’s share price, this transaction represented the first time that any of ARK Invest’s ETFs has ever sold Coinbase shares. It is essential to take into consideration the fact that authorities and insiders at Coinbase participate in 10B5-1 selling plans months in advance, and that this tranche of sales was carried out in line with a trading strategy that was formed on August 16.

After the publication of the Wells notice, which warned of possible enforcement action by the SEC, the share price of Coinbase has not been able to recover to its former level. This is likely due to the fact that the SEC is likely to take enforcement action. Brian Armstrong, the chief executive officer of the firm, had also sold shares in his company between March 17 and March 20, only a few days before the Wells notice and the consequent decline in share price. These sales took place between March 17 and March 20.

Following the settlement that the SEC reached with Kraken on February 9, in which it was alleged that Kraken’s staking services qualified as securities, Coinbase has repeatedly asserted that its staking products are fundamentally different from Kraken’s products. This is in response to the allegations that Kraken’s staking services qualified as securities. After the conclusion of settlement talks between the SEC and Kraken, Coinbase made its claims.

In conclusion, ARK Invest has continued to purchase Coinbase shares despite receiving information from Wells and a decline in the price of Coinbase’s shares. This is the case even if the price of Coinbase’s shares has fallen. Before the Wells notice, Coinbase executed a trading plan that it had designed on August 16 in order to sell 160,887 shares from its ARK Fintech Innovation ETF. Coinbase has made the assertion that its staking products do not constitute securities in any way.