Bitcoin and Twitter are ‘black eyes’ for Tesla, Wedbush’s Dan Ives explains


You’re here (TSLA) has had its share of setbacks over the past year.

The company revealed it sold 75% of its bitcoin holdings last quarter, and at the same time, CEO Elon Musk is in an ongoing battle with Twitter after trying to back out of his deal to acquire the social media platform.

“I think they both have been black eyes for the Tesla story, for Musk in particular,” Ives said on Yahoo Finance Live (video above).

Tesla, which initially purchased $1.5 trillion worth of bitcoin (BTC-USD) in February 2021, converted approximately three-quarters of its bitcoin holding to fiat currency before the end of its second quarter, adding $936 million of cash to its balance sheet. It also announced it would start accepting bitcoin as payment for its vehicles. The moves sent crypto prices higher at the time.

Crypto had a very volatile year, however. Following Tesla’s announcement that it had shed most of its bitcoin holdings, the stock moved higher.

Ives said it was “a move in the right direction in terms of some of those sales,” and Tesla executives also defended the move in the company’s most recent earnings call.

“We are certainly open to increasing bitcoin holdings in future,” Tesla CFO Zachary Kirkhorn said. “So this should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company given COVID shutdowns in China.”

Musk also noted on the call that Tesla has not sold any of its Dogecoin (DOGE-USD) holdings.

Tesla investors are also grappling with Elon Musk engaged in a legal battle with Twitter, which is fighting to force him to honor the terms of his $44 billion deal to buy the social media platform.

Earlier this week a Delaware Chancery Court judge granted Twitter its motion for an expedited trial against Tesla’s CEO. The five-day trial is scheduled for October.

In this file photo illustration, a phone screen displays the Twitter account of Tesla CEO Elon Musk with a photo of him shown in the background, on April 14, 2022, in Washington, DC.

In this file photo illustration, a phone screen displays the Twitter account of Tesla CEO Elon Musk with a photo of him shown in the background, on April 14, 2022, in Washington, DC.

“The Twitter situation, because of Musk’s ownership and what ultimately could happen in the court case, that continues to be a bit of an overhang,” Ives said. “And that has ultimately played out in terms of what we have seen in the stock.”

Tesla stock is off more than 22% year to date.

“The Street and legal experts across the board view Twitter as having a strong iron fist upper hand heading into the Delaware court battle after months of this fiasco and nightmare playing out since April,” Ives wrote in a recent note. “This will be a fierce battle in court with the fake account/bot issue front and center, but ultimately, Twitter’s board is holding Musk’s feet to the fire to finish the deal at the agreed upon price.”

Seana Smith is an anchor with Yahoo Finance. Follow her on Twitter at @SeanaNSmith.

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