GameStop mania was an awakening call, but now the capital markets have reached a silly mode.
Tesla electric car maker Tesla said in a filing Monday that it has bought $ 1.5 billion worth of bitcoin and plans to start accepting payments in the cryptocurrency for its future results. Shares of Tesla and bitcoin both traded higher after the announcement. This follows social media posts by the influential leader of automation maker Elon Musk, who had already helped drive the price of bitcoin to a record. The news added about $ 100 billion to the combined market value of bitcoin and Tesla on Monday.
The investment is more than symbolic for the company, to be equated to Tesla’s research and development tab for 2020. And while merging two of the most popular investment topics under one roof is undoubtedly the winner of the company. -today, the decision involves even more risk of owning what is already one of the most speculative stocks of the mainstream bull market.
As Tesla itself said in the filter, prices for digital assets such as bitcoin have been volatile in the past. Cryptocurrencies are a relatively recent development and their long-term adoption by consumers, investors and businesses is highly uncertain. That adds to the speculative momentum that is already gripping Tesla’s stock price in a feedback curve. In fact, the manager of the most popular active fund recently, Cathie Wood of ARK Invest, has placed a huge bet on both Tesla and bitcoin-owned trusts, fueling at a higher rate of in-stream.
At a market value of around $ 800 billion, Tesla trades at about 6.5 times the total value of Ford and General Motors, despite controlling a small fraction of the global automotive market. And Tesla has recently lost market share in western Europe to competitors including Volkswagen, which has begun to compete strongly in the electricity sector. The news of Tesla’s bitcoin investment came to a negative headline for the company on Monday about quality issues identified in China’s key market.