Future Fund LLC Managing Partner Gary Black recently dismissed the relevance of Tesla Inc.’s Bitcoin holdings to the company’s stock price. He argues that even with Bitcoin reaching record highs, the impact on Tesla’s valuation is minimal and the company should prioritize investments in its core electric vehicle (EV) business and share buybacks.
Black’s Assertion: Bitcoin’s Price Irrelevant to Tesla’s Stock
Black took to X (formerly Twitter) to express his view, stating that even if Bitcoin reached $100,000, Tesla’s holdings would only translate to approximately $0.33 per share. He emphasized that shareholders can invest in Bitcoin independently and that Tesla’s capital should be allocated more strategically. He believes Tesla should prioritize building new production facilities, expanding its EV model lineup, growing its energy business, and investing in robotaxi technology. Share buybacks should be considered only after these core investments are addressed.
Black’s Criticism and Call for Strategic Capital Allocation
Black has been a vocal critic of Tesla’s Bitcoin investment since 2021, arguing that it distracts from the company’s core mission of EV development and raises concerns about earnings quality. His recent comments reiterate his stance, urging Tesla to focus on strengthening its position in the rapidly expanding EV market. He advocates for reinvestment in innovation and expansion rather than speculation in cryptocurrency.
The Future Fund’s Reduced Tesla Position
Black’s own investment firm, The Future Fund Active ETF (FFND), recently decreased its Tesla holdings to 4.31% from 12.2%, making it the fund’s fifth-largest position. The Future Fund’s average purchase price for Tesla stock since early 2023 is $162, with an average selling price of $252. Black defended this move, emphasizing the principle of “buy low, sell high” as a core tenet of professional investing. He has faced criticism from Tesla bulls for this decision, but maintains that it is a sound strategy based on market dynamics and long-term value creation.
Tesla’s Continued Dominance in the EV Market
Despite the debate surrounding its Bitcoin holdings, Tesla remains the undisputed leader in the EV market, boasting a market capitalization exceeding $1 trillion. The company’s focus on innovation, production expansion, and building a comprehensive charging infrastructure continues to drive its growth and solidify its leading position.
Conclusion: A Call for Focus and Strategic Investment
Black’s comments highlight a key debate in the investment community: should companies like Tesla focus solely on their core business or diversify into other assets like Bitcoin? While Bitcoin has shown impressive gains, Black argues that for Tesla, strategic investments in its core EV business offer a more sustainable path to long-term value creation for shareholders. He urges the company to prioritize innovation, expansion, and operational efficiency to maintain its leadership in the increasingly competitive EV landscape.
