Analyst calls Tesla’s billion dollar investment in Bitcoin an “act of desperation” | 02/20/21

After the electric car manufacturer Tesla announced its billion-dollar investment in the crypto currency Bitcoin and announced that it would also offer payment with the crypto currency in the future, the price of the cyber veteran rose to new record levels. GLJ analyst Gordon Johnson condemns this step in the strongest possible terms and assumes that the company wants to divert attention from its ailing sales business.

• Tesla invests in Bitcoin and wants to enable crypto payments
• Course jump after words of praise from the CEO Elon Musk

• Analyst suspects diversionary maneuvers due to business developments

After Musk praise: Tesla is in favor of Bitcoin

Only recently, the electric car pioneer Tesla spoke out in favor of the crypto currency Bitcoin and dared to take a decisive step to implement its new player in the future. For example, the US company based in Palo Alto, California, announced that it would soon be offering Bitcoin payments when buying its vehicles, as reported by the German press agency, which refers to a message from Tesla to the US Securities and Exchange Commission. At the same time, however, the company also shows that it actually believes in the cyber motto – and has invested 1.5 billion US dollars in the Internet currency. Tesla announced that it would be able to invest in digital assets, but also in commodities such as gold, in the future by means of a new company policy.

Tesla CEO Elon Musk has also spoken out in favor of Bitcoin on his mouthpiece Twitter lately, so this step may come as little surprise. The entrepreneur recently added the hashtag “#Bitcoin” to his profile without comment and repeatedly mentions the fun currency Dogecoin. He also recently stated in a “clubhouse” discussion that he was “an advocate of Bitcoin”.

Kritik an Teslas Bitcoin-Investment

Gordon Johnson from the analysis company GLJ Research is critical of this step, as Benzinga reports. “Tesla took a large chunk of the cash […] and invested it in a highly volatile and allegedly manipulated cryptocurrency, “Johnson writes in a note available to the trading portal. After the electric car maker announced, the Bitcoin price jumped up to $ 44,899 on the Bitstamp trading platform. The next day it went down The rally continues: Bitcoin set its sights on the US $ 50,000 mark and reached another record high at US $ 48,003.72 via CoinMarketCap. The high is now US $ 49,161.26 (as of February 15 2021).

For Musk promoting the cryptocurrency just a few days before the publication of Tesla’s crypto plans, he could now justify himself to the SEC, reports “The Sydney Morning Herald”.

But the consequences for the environment that come with the crypto trend cannot be dismissed, says Johnson. The strategist describes the currency as an environmental catastrophe and refers to the high electricity consumption that is necessary for mining it and that corresponds to that of the whole of Switzerland.

Targeted diversionary maneuver?

According to Johnson, the fact that Tesla is making this announcement public now is not a coincidence, but a calculated diversionary maneuver to steer the focus away from negative business developments. The analyst points to a decline in sales in China, delays in the construction of the Gigafactory in Berlin and problems with quality control. The market launch of the Semi truck, which was first presented in 2017, should actually have taken place in 2019 and has now been postponed to the end of the year.

Instead, Tesla invested this capital in Bitcoin because it no longer had any internal uses for it and it could not be invested in research or development. “We see this as an act of desperation from a CEO whose company is facing real competition for the first time,” Johnson said of industry competitors like Nikola, NIO and XPeng, as well as traditional automakers like Volkswagen, who are selling their E – Gradually expand the car fleet. With the Bitcoin investment, the company wanted to provide security, because if the crypto holdings were to be sold, profits of up to 200 million US dollars would be possible, with which Tesla could offset its losses through its core business.

Johnson has been bearish on Tesla stock for some time. So he sticks to his sell recommendation for the paper and leaves the price target for the share at 67 US dollars. Tesla stocks are currently trading at US $ 798.15 on the NASDAQ (closing price on February 17, 2021), after showing an overall increase of 743 percent last year.

Finanzen.at editors

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