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Tesla Makes Roughly $1B of Profit from Its Bitcoin Investment, Wedbush Analysts Say

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by Benjamin Godfrey · 3 min read
Tesla Makes Roughly $1B of Profit from Its Bitcoin Investment, Wedbush Analysts Say
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The reported profit estimates from Tesla’s Bitcoin purchase may appear attractive to other publicly traded companies in the United States and beyond.

Analysts from Wedbush Securities, a Los Angeles-based investment company, have revealed the approximate profitability of the Bitcoin (BTC) investment made by electric vehicle maker Tesla Inc (NASDAQ: TSLA). As contained in a note shared by the firm which doubles as a market research outfit, the EV giant has made roughly $1 billion from this cryptocurrency’s purchase.

Tesla took the world, especially the cryptocurrency ecosystem, by storm when it revealed earlier that it has made a $1.5 billion Bitcoin investment. Following the announcement, the price of the cryptocurrency surged as much as 20% to trade at new all-time highs (ATHs). Although there has been a host of institutional investors betting big on the premier digital currency, Tesla’s investment is by far of the utmost boost this year.

According to the analysts, Daniel Ives and Strecker Backe, the Elon Musk-led company has profited more from this Bitcoin purchase than the revenue reported for the 2020 fiscal year selling cars.

“Based on our calculations, we estimate that Tesla so far has made roughly $1 billion of profit over the last month from its Bitcoin investment given the skyrocketing price of Bitcoin, which now tops a trillion of market value,” the analysts wrote, “To put this in perspective, Tesla is on a trajectory to make more from its Bitcoin investments than profits from selling its EV cars in all of 2020.”

Wedbush still maintains a neutral rating on Tesla’s stock with a 12-month price target of $950. However, Tesla shares are up 0.15% to $782.50 in the after-hours trading, after ending Friday’s session with a 6.08% drop.

Can Tesla Profit from Bitcoin Investment Help Support Mass Adoption?

The reported profit estimates from Tesla’s Bitcoin purchase may appear attractive to other publicly traded companies in the United States and beyond. The Wedbush analysts believe the automaker’s decision may have a ripple effect on the market. However, they were of the opinion that only a sizeable number of firms will follow the same path, except the right regulations are put in place.

“While the Bitcoin investment is a side show for Tesla, its clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months. We still expect less than 5% of public companies will head down this route until more regulatory goal posts are put in place around the crypto market,” they wrote.

The duo believes the crypto market is already getting the needed attention from industry players marked by “more mainstream adoption in 2021 and we believe will have a seismic impact for blockchain, payments, banks, and semis in the years to come,” they noted.

The cryptocurrency market is still in its infancy, and with calls for better regulatory clarity in the Biden administration, higher growth heights may be recorded across the board.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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