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Bitcoin Price Soars 10% After Tesla (TSLA) Says it Bought $1.5B in a 'Significant Strategic Move', According to Analyst

February 8, 2021 8:32 AM

Bitcoin (BTC) price soared about 10% in the last hour or so after Tesla (NASDAQ: TSLA) announced in an SEC filing today that it bought $1.5 billion worth of BTCs and expects to start accepting the cryptocurrency as payment in the near future.

Shares of the EV company are up 2.6% in pre-open Monday.

The move was made for more flexibility to further diversify and maximize returns on our cash.

“As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.

“Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” according to the filling.

Tesla reported over $19 billion in cash and cash equivalents at the end of 2020.

Wedbush analyst Daniel Ives described the latest news from Tesla as a “significant strategic move”.

“While many on the Street have discussed the prospects of this move for Tesla, 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,” Ives wrote in today’s note.

Ives rates TSLA with a “Neutral” rating and a price target of $950.00. The firm's Bull Case target remains $1,250.

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