Elon Musk’s bitcoin binge has boosted the fortunes of similarly digicurrency-friendly firms.
Companies that were already ahead of Tesla in accepting payment in the crypto currency are now benefiting from the publicity generated by his EV firm’s $1.5 billion investment – and that has pushed up the share prices of companies that had also invested in digital assets.
Shares of companies that have invested in bitcoin have vastly outperformed on Wall Street in 2021 and are now extending their gains thanks to Tesla’s bet on the soaring digital currency.
Read more: Directors quit Aussie casino firm after damning inquiry report
The price of bitcoin hit a record high over $48,000 on Tuesday in a two-day surge after Tesla said on Monday that it had bought the digital currency and would soon accept it as a form of payment for cars.
But Georgia car dealer Christopher Basha said he was way ahead of Elon Musk in embracing bitcoin as a currency for selling vehicles.
He began accepting bitcoin payments in 2015 but no customers were interested. “I almost forgot about it,” he said.
In 2017, bitcoin prices surged, and one customer used the cryptocurrency to buy four Kias for more than $150,000, Basha said. Bitcoin payments have been picking up since late last year, with prices rallying.
Basha is one of a small group of auto dealers who have been accepting bitcoin and other cryptocurrencies from customers well ahead of Tesla.
BRANDING TOOL
Dealers said accepting cryptocurrency is a good marketing and branding tool. But it is still a niche business. Price volatility and the absence of trusted banks and other financial intermediaries make bitcoin payments a risk for dealers who are not tech savvy.
Tesla’s bitcoin purchase amounts to a minor bet for the fast-growing electric car company with an $800 billion stock market value. However, it bolstered the digital currency’s emerging credentials as a mainstream financial asset.
Driven in part by interest from institutional investors, the price of bitcoin has quadrupled in the past four months, surging far beyond record highs set in 2017. Some investors view it a hedge against inflation.
Companies with much more significant exposures to bitcoin in proportion to their overall stock market value than Tesla have also rallied following Tesla’s disclosure, increasing already strong stock gains driven by the cryptocurrency’s recent rally.
MicroStrategy surged 22% on Tuesday, bringing its gain this week to over 50%, and it has surged over 200% so far in 2021. The business intelligence software company has bought about 71,079 bitcoins, now worth over $3 billion and equivalent to over a quarter of its $11.8 billion stock market value.
STOCK JUMP
Canadian financial technology firm Mogo, which in December said it would invest up to 1.5 million Canadian dollars in bitcoin, jumped 45% on Tuesday, bringing its gain since Tesla’s announcement to 85% and giving it a stock market value of $318 million.
Meanwhile, Tesla EV rival Rivian, which is backed by Amazon and Ford, is looking to go public as soon as September at a valuation of about $50 billion or more, it was reported on Tuesday.
Rivian, which aims to put an electric pick-up and SUV in production this year, announced last month a $2.65-billion investment round led by T. Rowe Price. The start-up has said it has raised $8 billion since the start of 2019.
In 2019, Amazon ordered 100,000 electric vans from Rivian. The first Amazon vehicles go into production at Rivian’s factory in Normal, Illinois, in late 2021, with all deliveries to be completed by 2024.
- Reporting by Reuters
Also on ATF:
Renewables fund targeting green power in US, Japan and Taiwan
Tesla summoned to China regulators over technical, safety issues
