While the Bitcoin investment is a side show for Tesla, it has clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies.
Much has been made about the hefty sum that Tesla Inc. has invested in bitcoin, a speculative asset that has only been around since 2009.
Early estimates from prominent technology analyst Dan Ives sees the investment by the electric-vehicle maker, headed by outspoken Chief Executive Officer Elon Musk, already minting a digital paper profit of at least $1 billion, as the price of the asset soars to records.
“Based on our calculations, we estimate that Tesla so far has made roughly $1 billion of profit over the last month…To put this in perspective, Tesla is on a trajectory to make more from its Bitcoin investments than profits from selling its [electric vehicle] cars in all of 2020,” wrote Wedbush’s prolific analyst Dan Ives, in a note published on Saturday afternoon.
Earlier this month, Tesla Inc. TSLA, -0.77% became the latest and most well-known major corporation to take a stake in bitcoin, underscoring the increasing acceptability of the crypto.
The move by Tesla to invest in bitcoin was seen as further confirmation of the legitimacy of the nascent asset that didn’t exist until about 12 years ago.
On Friday, bitcoin’s price soared to a record around $54,000 and breached a total market valuation of $1 trillion, further bolstering the perception of the crypto as a legitimate asset if not a nascent one.
Bitcoin prices are up over 90% so far in 2021, according to FactSet data. By comparison, gold GC00, 0.28%, considered a rival to bitcoin, is down by about 6% in 2021. Meanwhile, the Dow Jones Industrial Average DJIA, +0.00% has gained nearly 3% thus far in the year, the S&P 500 index SPX, -0.19% has climbed about 4% and the Nasdaq Composite Index COMP, +0.07% has advanced 7.7% over the same period.
Tesla’s stock, by the way, has climbed over 11% since the start of the year.