According to Wedbush’s calculations, Tesla has made roughly $1 billion over the last month. Dan Ives, an analyst of Wedbush, believes that Tesla is on a trajectory to make more from its Bitcoin investments than profits from selling cars.
Tesla Inc. TSLA caused a sensation earlier this month. It became the most well-known significant corporation to take a stake in Bitcoin. Tesla had bought $1,500 million in Bitcoin. Besides, the company claimed that it expected to begin accepting payment in the cryptocurrency for its products in the future. This pushed the cryptocurrency up and also generated impressive profits for the electric vehicle maker.
On Friday, Bitcoin price peaked at a new record high of around $54,000. It bolstered the crypto’s perception as a legitimate asset.
On Saturday, the cryptocurrency extended its profits to a new record at $57,492.
Gold, Bitcoin’s primary rival, dropped by 6% this year. Meanwhile, BTC prices soared over 90%.
Tesla’s stock has climbed over 11% since the start of the year.
Ives wrote that the investment firm expects less than 5% of public companies would head down this route until the crypto market gets more regulated. The analyst sees cryptocurrencies starting to gain more mainstream adoption this year. This will have a massive impact on the blockchain, payments, banks, and semis in the years to come, Ives said.
Why did Tesla invest in cryptocurrency?
According to Tesla, the purchase of Bitcoin was an attempt to maximize profitability on cash that is not used in the business’s day-to-day operations.
Some analysts believe that Tesla’s investment could be a before and after for the cryptocurrency.
However, Neil Wilson, a chief market analyst at Markets.com, warned that bitcoin is a very volatile cryptocurrency. Tesla is now starting to take a lot of risks. This may not worry many investors, but some conservative types might be concerned, he said.
Tesla’s purchase of Bitcoin was the validation of the cryptocurrency for some and is seen as a stepping stone for other publicly traded companies to make a similar move.
Tesla posted net losses from its business. Analysts think, possibly Tesla made more profit on its one-time $1.5 billion Bitcoin purchase than on its vehicles’ profits in the last decade.
According to analysts, gains from the purchase of Bitcoin could be higher than what Tesla earned from his entire business in fiscal 2020.
Still, time will tell how many Bitcoin Tesla owns and whether it intends to hold them for the long term or sell some for a profit.