Domain Daily: Tesla Sells and Amazon Buys

The Dose

  • Tesla Parts With Bitcoin

  • Amazon Goes Deeper Into Healthcare

  • An Amazon Bull


Tesla Sells the Bulk of Its Bitcoin

In its latest quarterly report, the automaker disclosed that it sold 75% of the bitcoin held in its corporate treasury.

The Point: Tesla said it sold because it was "concerned about overall liquidity of the company given COVID shutdowns in China." Tesla's purchase of $1.5 billion of bitcoin in 2021 sent shockwaves through the bitcoin market. Many onlookers viewed the purchase as a sign that the digital asset had entered its next stage of adoption. As such, Tesla's purchase was a significant catalyst behind bitcoin's spring 2021 bull run. So what should we make of this decision? Well, for one, given Tesla's bullish position on digital assets up until recently, it shows the consternation caused by China's continued pandemic lockdowns. But it also is perhaps a sign that bitcoin isn't quite ready to serve as a balance sheet asset due to its extreme volatility. Regardless of what bitcoin's upside may be, it takes a steel will to hold an investment that regularly sees its price fluctuate by more than 50%.  

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Amazon Buys One Medical in an All-Cash Deal

The online retail giant is shelling out $3.9 billion to purchase the operator of boutique primary-care doctors' offices.

The Point: It's no secret that Amazon has been trying to carve out a niche in the medical industry. The retailer has already launched a pharmacy and telehealth service. Now it's buying One Medical to expand its reach into primary care. We all know that healthcare is expensive. Much of that is due to systemic inefficiencies. Amazon has turned itself into a trillion-dollar enterprise by rooting out costs and delivering a streamlined experience to its customers. As founder Jeff Bezos famously said, "your margin is my opportunity." And perhaps no industry is as ripe for cost-cutting as healthcare.  

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Amazon Stock Gets Bullish Endorsement

Jefferies analyst Brent Thill wrote in a note to clients that he believes Amazon's stock is undervalued.  

The Point: Thill came to this conclusion through a sum-of-the-parts (SOTP) analysis. In short, a SOTP is a technique analysts use to value companies with multiple business lines. Basically, they treat each of a company's segments as if they were stand-alone entities. They then try to determine what each business line would be worth if they were independent and then add all the values together to get a rough estimate of what the aggregated business should be worth. By Thill's calculation, Amazon's current stock price is undervalued by about $29 per share. That's approximately what the Jefferies analyst pegs just Amazon's core-retail business as being worth (assuming it was independent). If Thill is directionally correct, then Amazon's stock looks pretty attractive at its current price. But before you go out and hit the buy button, remember this: SOTPs, like any other type of financial model, are more art than science. They provide a valuable framework for evaluating stock prices, but they're hardly a sure thing.  

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*The content team responsible for the above content uses primary and secondary sources they believe to be accurate, which includes but is not limited to Bloomberg, The Wall Street Journal, Financial Times, and CNBC, among others. 

*Domain Money Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, has (as of this writing) the following assets mentioned in this communication as part of its managed portfolios: TSLA, BTC, AMZN