Tesla’s Big Bitcoin Bet Turns Sour as Cryptocurrency Crashes
June 15, 2022
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TSLA Stock Intrinsic Value – Tesla’s ($NASDAQ:TSLA) big bet on Bitcoin is beginning to look like a blunder amid a violent crash for cryptocurrencies. While adding Bitcoin in early 2021 looked like a wise decision throughout the year and even into early 2022, the tables have turned rather quickly in recent months. The move sent the already volatile asset soaring, with Tesla’s investment helping legitimize Bitcoin and leading other companies to follow suit. But since Tesla’s announcement, Bitcoin has crashed hard, losing over half its value from its peak. The sell-off was triggered by a number of factors, including China cracking down on cryptocurrency trading, concern over regulatory hurdles in the U.S., and a general loss of confidence in the asset. Tesla’s investment has lost billions of dollars in value as a result, and the company is now facing questions over whether it was wise to put so much money into Bitcoin in the first place. What’s more, Tesla’s decision to accept Bitcoin as payment for its cars has also come under scrutiny. The move was meant to make Tesla’s cars more accessible to buyers who may not have traditional fiat currency, but with Bitcoin’s value in flux, it’s not clear whether it’s a good way to do business. All of this is casting a shadow over Tesla’s otherwise strong financial performance. The company reported record revenue and profits in the first quarter of 2021, but its shares have fallen sharply in recent weeks as Bitcoin’s problems have mounted. It’s still early days, but Tesla’s big bet on Bitcoin is looking increasingly like a mistake. The company will need to decide whether to stick with the asset or cut its losses and move on. Either way, the episode is a reminder of the risks of investing in cryptocurrencies.
Market Reaction
The current media sentiment on Tesla is mostly positive. On Tuesday, Tesla’s ($NASDAQ:TSLA) stock opened at $654.9 and closed at $662.7, up by 2.4% from the previous day’s closing price of $647.2.
VI Analysis – TSLA Stock Intrinsic Value
Investors often focus on a company’s fundamentals in order to assess its long-term potential. However, analyzing a company’s financial statements can be complex and time-consuming. The VI app simplifies this process by providing users with key financial data and ratios, as well as a fair value estimate for a company’s stock. Based on the app’s analysis, TSLA Stock Intrinsic Value is around $694.2. However, the stock is currently trading at $850, which represents a overprice of 22.45%.
Summary
However, the cryptocurrency has since crashed, and Tesla’s bet has turned sour. The news of Tesla’s investment sent Bitcoin prices soaring, but the rally was short-lived. Despite the setback, Tesla remains committed to Bitcoin and plans to accept it as payment for its cars in the future. CEO Elon Musk has even said that he thinks the cryptocurrency has a bright future. It remains to be seen whether Tesla’s gamble will pay off in the long run, but for now, it looks like the company’s bet has turned sour.
