There was a time when cryptocurrency was the trend and it was taking over until it died. There was no more news about cryptocurrency. However, the richest man in the world at that time, Elon Musk, shined a light on cryptocurrency especially Bitcoin.
On Monday, Tesla invested $1.5 billion in Bitcoin, causing its stock price to surge by 10%. Additionally, Tesla announced that it will soon accept Bitcoin as a form of payment. Now Tesla joins Microsoft, Wikipedia, and PayPal as companies that accept Bitcoin. After Elon Musk orchestrated this move, there was heavy trading of cryptocurrency in the stock market, which has led to an increase in stock prices for other cryptocurrencies as well, such as Dodge Coin.
Investment analysts have been skeptical of Elon Musk’s latest move. David Trainer, the chief executive of investment research firm New Constructs, said that investing in Bitcoin is another gimmick to lure more unsuspecting investors into gambling on Tesla’s stock. To prove his point, In the last earnings report, Tesla underperformed on earnings per share expectations but over-performed on revenue, according to the last earnings report.
Analysts might be right because Tesla is facing fierce competition. That is because GM – the maker of Buick, Chevrolet, and Cadillac among others – announced that it will stop making gasoline-run cars by 2035. Moreover, the company will invest $27 billion from 2020 to 2025 in order to make 30 types of electric vehicles.
References:
1)Patnaik, S., Randall, D., & Irrera, A. (2021, February 08). Musk's Tesla Electrifies Bitcoin with $1.5 billion Bet, car Payments pledge. Retrieved February 08, 2021, from https://ca.finance.yahoo.com/finance/news/tesla-invests-1-50-billion-130251069.html#:~:text=Tesla%20sends%20bitcoin%20soaring%20with%20%241.5%20billion%20investment%2C%20payment%20promise,-Mon.%2C%20February%208&text=(Reuters)%20%2D%20Tesla%20Inc%20said,jump%20in%20the%20electronic%20currency.
2)Telford, T. (2021, February 08). Tesla invests $1.5 billion in Bitcoin, will start accepting it as payment. Retrieved February 08, 2021, from https://www.washingtonpost.com/business/2021/02/08/tesla-bitcoin-musk-dogecoin/
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