Elon Musk’s Tesla has often been described as the “stock market bitcoin”. This is because there are a lot of similarities between the company and the crypto hype of 2017, says International Investment firm, EXANTE’s crypto specialist, Alexey Kirienko.
Since the beginning of the year, Tesla’s stock has surged by 300 percent and it still keeps increasing, without any obvious reasons. However, the price of the stock is greatly overvalued (at the time of writing, it equals to $1643 per share). The motivation behind the growth is the same as for crypto three years ago – the desire of investors not to miss the last train. Trading Tesla is almost the same as trading bitcoin.
Nevertheless, there are some fundamental differences between investing in Bitcoin and Tesla.
The pros for Tesla are:
▪️ Interest in electric cars is significantly growing (particularly in Asia). Investors take this fact into account.
▪️ Tesla forecasts a significant cash inflow on the 20-30 years horizon. “Investors believe that this company will operate for decades to come, bringing substantial profits and sustainable margins. There is a large probability that this assumption is incorrect,” – says Gregory Klumov, Founder of stablecoin platform Stasis.
▪️ Company’s Q2 earnings will be released, clarifying numerous of the rumours. Unsatisfying results may cause the stock to plummet.
▪️ The US stock market is overheated. 📢 “Investing in stocks of many US companies is a gamble. The bubble will burst sooner or later, only its timing remains a mystery,” – CEO of Six Nines data-center, Sergey Troshin noted.
Note, there isn’t a maximum amount of stocks: as quotes rise, cost of financing for the company falls. The company can always do a SPO and issue any number of shares, to bring the cost of financing down to the market level.
The pros for Bitcoin are:
▪️ Noone can “print” or create additional bitcoins.
▪️ Conventionally volatile bitcoin displays a steady performance at the moment. After halving, the miners aren’t ready to sell bitcoin at lower than $6-8 thousand, there’s a reasonably strong demand for the asset at such pricing.
▪️ Demand exceeds supply: institutional investors and funds are buying more than is mined.
▪️ There’s an existing infrastructure, even ATM’s for bitcoin, unlike other crypto currencies. It’s listed on crypto exchanges and derivatives on bitcoin are issued etc.
“BTC has a moderate growth potential. If you’re not a short-term trader, you should go long on the asset, not short,” adds Mr Kirienko.