Tesla CEO Elon Musk does almost everything differently from other entrepreneurs, and as of Monday this has also been confirmed for the handling of liquid reserves on the balance sheet. Tesla was the first large company to invest part of its cash in the cryptocurrency Bitcoin, according to the latest 10K stock market report. This and the additional information that your own electric cars will soon be able to be paid for directly with crypto money caused a jump in the price of Bitcoin on Monday. Tesla shares also rose noticeably at first and even approached a new record level, but then closed only slightly above Friday’s price at $ 863.42.
Tesla observer gets out of stock
For a formerly professional stock market observer who has now analyzed Tesla on Twitter and has long recommended it to buy, CEO Elon Musk’s latest surprise was too much. He had closed his Tesla positions, informed @ garyblack00 on Monday evening, according to his profile, he used to work in leading positions at asset managers and investment banks. Tesla has always been a high-risk stock, he wrote, but the Bitcoin decision makes it even riskier. In addition, Tesla should have explained this step at least at the investor conference call at the end of January, he criticized.
First of all, it can be said that Bitcoin profited much more from the news on Monday than Tesla itself. Immediately after the 10Q report became known, the price of the cryptocurrency jumped by around $ 4,000 to a new record of around $ 44,000; by the end of US trading, it was even close to $ 47,000. According to an overview, the total value of all Bitcoins with around 870 billion dollars exceeded that of all Tesla shares with a total of almost 820 billion dollars.
Update: On Tuesday, the share and cryptocurrency even developed in different directions. Tesla lost almost 2 percent on the stock market in a generally weak environment, while Bitcoins were still close to $ 47,000 and thus above Monday’s closing price. According to calculations by Yahoo Finance, Tesla has already made 37 percent or 561 million dollars profit on its crypto investment (assuming an average purchase price of $ 34,200).
What exactly Musk and his team are aiming for by stepping into the cryptocurrency world has meanwhile remained unclear. Obvious is the marketing effect. There were enthusiastic comments on Twitter that the purchase of a Tesla with Bitcoin is definitely pending. But that was also possible before. You only have to exchange your own crypto credit for state money beforehand, which many providers make possible without much effort. A more corporate-political consideration was that Tesla was active in many different markets and could use Bitcoin credit to prevent exchange rate effects. However, the price of digital money is currently fluctuating more than any real currency, so that it does not seem suitable to reduce such risks.
More Bitcoin Purchases by Businesses?
Regardless, the crypto scene was enthusiastic about both Tesla news. If more companies decided to invest liquid funds in Bitcoin instead of short-term government bonds, that would actually mean significantly more demand. According to Bloomberg, these reserves amount to $ 2.79 trillion for the companies in the US S&P 500 index alone (which Tesla recently joined).
The agency quotes a fund advisory firm, according to which there are good fundamental reasons for companies to diversify with their own money in cryptocurrencies. A finance professor, on the other hand, said Bitcoin was too volatile to be used as a safe store of value over a period of a few months. Especially in the tech sector, observers still see the possibility that other large companies such as Google or Facebook could join Tesla.