Bitcoin is ‘Friend and Foe’ for Tesla and Elon Musk: Wedbush

Feb 23, 2021 | Decrypt News | 0 comments

bitcoin-is-‘friend-and-foe’-for-tesla-and-elon-musk:-wedbush

Tesla stock is now “heavily tied” to Bitcoin, “for both good and bad,” according to a new note from market research firm Wedbush Securities. 

Last week, Wedbush noted that Tesla had already seen more than $1 billion in profit from its $1.5 billion Bitcoin investment in January, more than its entire $721 million in profit from selling cars in 2020.

But Wedbush still calls the Bitcoin buy a “sideshow.”

Tesla is “an EV play entering the golden age of EVs and there is a lingering worry that the Bitcoin sideshow could overshadow the overall EV growth story playing out for Tesla in 2021 and beyond in the eyes of the Street,” Wedbush noted.

Joined at the hip

Tesla’s share price has plummeted for two days in a row; at press time on Tuesday, TSLA is trading at around $685, after having dropped as low as $625 earlier today.

Tesla’s stock price. Image: Google

This drop happened concurrently with a crash in the crypto market, as Bitcoin’s plummeted by $10,000 in its largest one-day drop to date. Thus Wedbush concludes, in the title of its note, that Bitcoin is a “friend and foe” for Musk.

While conceding that $1.5 billion is a small percentage of the company’s overall cash position (10% at the time of purchase in January) that “does not move the needle for Tesla,” Wedbush argued that many investors have now begun to “tie Bitcoin and Tesla at the hip” as a result of its Bitcoin play (and the bullish stance taken by its CEO Elon Musk on Twitter).

After all, Wedbush argues, on Wall Street, “perception is reality.”

And perceptions change quickly.

Mere days ago, Wedbush sounded bullish on Musk’s Bitcoin embrace when it pointed out that Tesla’s Bitcoin buy netted the company $1 billion in profit. In today’s note, Wedbush says the swift reversal in Bitcoin’s fortunes “has driven some investors to the exits on this name in the near-term.”

Expect more volatility on the horizon, the analysts concluded.

News Source from Decrypt.co

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