Musk said on Wednesday that the company dumped 75% of its holdings of the virtual currency. It seems likely that plunging asset prices and a bleak economic backdrop played a role in both of the tech billionaire's decisions.
AP Photo/Noah Berger via BI Within months, the two parties will face off in court, as they fight to enforce Musk's merger agreement.
Musk said that he had sold $936 million worth of bitcoins to shore up the cash reserves of the company. Cryptocurrencies are a sideshow to the sideshow and not something we think about, according to the CEO of the company.
It's possible that Musk soured on his deal because he's worried about the bots, even though he made removing them a key part of his plan. Even though his company's operating cash flow grew by 9% year-on-year to $2.4 billion last quarter, and it ended the period with over $18 billion in cash and cash equivalents, he rushed to swap his company's digital currency for dollars.
It's easy to see how the 22% drop in Twitter stock since Musk first disclosed a stake in the company could be related to the 32% slump in the company's stock price. After all, his offer for Twitter now represents a 30% premium to its current market value, and buying it will eat up a lot more of his fortune than before his shares tanked in value.
In the last quarter alone, the price of bitcoin plummeted by over 50%, and it has fallen by roughly a third since the beginning of the year. The timing of the sales is hard to ignore, as Musk said that he was open to boosting its holdings in the future.
The economic outlook in the US is likely to be a factor in the decline of the three tech companies. Inflation has spiked to 40-year highs in recent months, causing the Federal Reserve to raise interest rates and shrink its balance sheet. With Americans feeling the pain of higher food, fuel, and housing costs, several experts are bracing for a potential recession.
Last month, Musk said that a recession was probable in the near term. The executive said that there would be a 10% reduction to the workforce over the next three months.
For precisely the reasons Musk outlined, he may have moved to scrap his takeover of the social networking site. When asset prices were high, he offered to buy the social networking site and invest in the virtual currency.
Musk may be trying to reverse some of his wilder moves as a recession looms and the price of his companies plummets.
The company didn't reply to a request for comment.
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