Wedbush – Tesla is Riding on Roughly $1bln Profit From Bitcoin Investment
Electric car manufacturer Tesla has recorded huge profits through its investment in Bitcoin (BTC), as per a report published by Wedbush Securities. The report specifically states that the US automaker has generated about $1 billion in profit following its investment of $1.50 billion in Bitcoin.
The private investment firm pegs the profits at “roughly $1 billion” for Tesla on the basis of its investment in the numero uno crypto. Daniel Ives, an analyst at Wedbush has made the assessment.
Against the backdrop of Bitcoin’s steep rise to transform in to a $1 trillion investment vehicle, Ives stated “Tesla is on a trajectory to make more from its Bitcoin investments than profits from selling its electric vehicle cars in all of 2020.”
Ives believes that Tesla’s investment in Bitcoin could encourage other publicly listed enterprises to take similar initiatives. In a note to clients, the analyst wrote: “While the Bitcoin investment is a side show for Tesla, it’s clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months.”
Nevertheless, Ives anticipates only a handful of firms to take similar initiatives as Bitcoin is still surrounded by regulatory uncertainty:
“We still expect less than 5% of public companies will head down this route until more regulatory goal posts are put in place around the crypto market, which is clearly starting to gain more mainstream adoption in 2021.”
Tesla’s $1.50 billion investment in Bitcoin (BTC) came to limelight when it made the customary filing with the US SEC (Securities and Exchange Commission) on February 8. There is no clarity about the quantity of Bitcoin bought by Tesla and the average purchase price as the company refrained from providing such details in the filing.
As Bitcoin was trading between $29,000 and $37,000 in January, an investment of $1.50 billion translates to 40,000 and 51,000 Bitcoins. At the time of writing this article, Bitcoin was trading at $52,984.36, reflecting an increase of 8.95 in the last week, as per data provided by CoinGecko.com.
Interestingly, the company earned $721 million as net profit in 2020, following a net loss of $862 million in 2019.