Expect More Companies to Follow Elon Musk Into BTC - Analysts

February 9, 2021 6:31 AM EST
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Market analysts are expecting more companies to follow suit and start investing in Bitcoin and cryptocurrencies after Elon Musk’s Tesla (NASDAQ: TSLA) announced Monday it bought $1.5 billion in bitcoin and would start accepting the cryptocurrency as payment.

“Every company should be looking at how to accept digital currencies, digital payments as part of their business scheme. It’s not that difficult. It’s what customers want, it’s where the world is moving. And so that I think he’s getting ahead of the curve, and I think you’re going to see every company look to figure out how they could, from McDonald’s to Bojangles, you name it,” said Mike Novogratz, founder of Galaxy Digital, told CNBC.

RBC Capital analyst Mitch Steves believes Apple (NASDAQ: AAPL) could enter into the crypto exchange business and could immediately gain market share and disrupt the industry. "Square generates ~$1.6B/qtr in bitcoin related revenue on an active install base that we estimate to be in the ~30M range. Apple's install base is 1.5B and even if we assume only 200M users would transact, this is 6.66x larger than Square," Steves commented in a note to clients on Monday. He sees the crypto opportunity in excess of $40B/year for Apple.

Bitcoin price soared over 10% yesterday on Tesla news. The price exceeded the $48,000 mark for the first time ever this morning while Tesla stock price closed the day 1.31% in the green.

Mohamed El-Erian, chief economic advisor at Allianz, expects that the world’s largest cryptocurrency will continue to benefit.

“What did Tesla tell you? Two things. One is that this will be a form of payment. And two is that this is an investment vehicle. So those are two powerful endorsements for the notion, I want to stress the notion that bitcoins are a currency, a money, because after all money is a store of value. Money is a form of payments,”

“So yes, that will build further momentum. As to the reaction, it’s going to be all over the place. Some will see it as visionary, others will say ‘wait a minute, if I want to invest in bitcoin, I’ll do it directly, I don’t need Tesla to do it for me.’ … So you’re going to see a whole range of reactions but for bitcoin holders, [Monday’s] good news,” he said.

In yesterday’s note to clients, Wedbush’s Dan Ives sees the latest news from Tesla as a “significant strategic move”.

“This morning's news formalizes the strategy of Musk and Tesla diving into the deep end of the poolof bitcoin and crypto. From a stock perspective, as we have seen with Microstrategy (and Saylor), this move could put more momentum into shares of Tesla as more investors start to value the company's bitcoin/crypto exposure as part of the overall valuation.

“Ultimately, investors and other industry watchers will be watching this closely to see if other corporations follow the lead of Tesla on this crypto path or on the other hand does it remain a contained few names that make this strategic jump around bitcoin,” he said in yesterday’s note.

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RBC Capital, Mohamed El-Erian, Tesla, Bitcoin