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Is Elon Musk’s Bitcoin Enthusiasm Good For Tesla’s Stock?

Tesla's CEO and founder Elon Musk has shown that his critics were mistaken for an uncountable number of times.

Tesla’s CEO and founder Elon Musk has shown that his critics were mistaken for an uncountable number of times. In addition to other things, Musk has become popular for bold and sometimes debatable comments during interviews and via social media. Notwithstanding, the shares of his company have become only more popular, boosting 400% as for the past 12 months, making Tesla the S&P 500‘s best performing member.

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Tesla (NASDAQ:TSLA) has recently shared its  quarterly earnings report that demonstrated a sixth consecutive profitable quarter and summarized a fiscal year that made car deliveries hit 500,000 units, boosting 36% if compared with the previous year. After hitting one record-high after another, almost all Tesla’s bears capitulated, saying they were not right to advise a ‘Sell’ of the stock.

“There is no graceful way to put this other than to say we got TSLA’s stock completely wrong,” RBC Capital Markets analyst Joseph Spak wrote last month. Evercore ISI analyst Chris McNally said he’s been:

“…on the considerably wrong side of TSLA for over a year now.”

Nevertheless, some of Musk’s recent decisions are considered too bold and even aggressive.

Such is his recent bet on crypto using Tesla’s cash to proceed with the investment. Thus, Tesla revealed that it had acquired $1.5 billion worth of Bitcoin, in order to enrich its cash holdings.

The company executives also mentioned that at some point there will be possible to allow customers to buy its cars using Bitcoin.

Bottom Line

For those traders and investors who have kept Tesla’s shares during the COVID-19 pandemic, the results have become shocking and eye-popping. Nevertheless such a surprising surge in shares’ price doesn’t justify a CEO’s move and his readiness to risk shareholders’ money on an extremely speculative bet in a part of the market that is highly volatile, innovative and unpredictable. In some experts’ view, Tesla still remains one of the most volatile and speculative stocks on Wall Street. This fact should warrant attention and caution from anyone trading it, investing in it or simply holding it.

 

 

 

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