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Bitcoin Or Tesla; The Investment Case For Both

Jul. 29, 2020 6:24 AM ET
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  • Reasons to invest in Tesla.
  • Reasons to invest in Bitcoin.
  • The Fundamental differences.

There’s a reason why Elon Musk's Tesla is called the "stock market bitcoin", there are a lot of similarities between the company and the crypto hype of 2017.

Since the beginning of the year, the company's stock has surged by 300% and it still keeps increasing, without any obvious reasons. The price of the stock is greatly overvalued (at the moment of writing, it equals to $1643 per share). The motivation behind the growth is the same as for crypto three years ago - the desire of investors not to miss the last train.

Trading Tesla is almost the same as trading bitcoin.

Yet there are some fundamental differences between investing in Bitcoin and Tesla.

Tesla:Interest in electric cars is significantly growing (particularly in Asia). Investors take this fact into account.

Tesla forecasts a significant cash inflow on the 20-30 years horizon.  “Investors believe that this company will operate for decades to come, bringing substantial profits and sustainable margins. There is a large probability that this assumption is incorrect,” - says Gregory Klumov, Founder of stablecoin platform Stasis.

Company’s Q2 earnings will be released, clarifying numerous of the rumours. Unsatisfying results may cause the stock to plummet.

The US stock market is overheated. “Investing in stocks of many US companies is a gamble. The bubble will burst sooner or later, only its timing remains a mystery,” - CEO of Six Nines data-centre, Sergey Troshin noted.Note, there is no maximum amount of stocks: as quotes rise, cost of financing for the company falls. The company can always do a SPO and issue any number of shares, to bring the cost of financing down to the market level.

Bitcoin:No one can “print” or create additional bitcoins.

Conventionally volatile bitcoin displays a steady performance at the moment. After halving, the miners aren’t ready to sell bitcoin at lower than $6-8 thousand, there’s a reasonably strong demand for the asset at such pricing.

Demand exceeds supply: institutional investors and funds are buying more than is mined.

There’s an existing infrastructure, even ATM’s for bitcoin, unlike other crypto currencies. It’s listed on crypto exchanges and derivatives on bitcoin are issued etc.

“BTC has a moderate growth potential. If you’re not a short-term trader, you should go long on the asset, not short” - says EXANTE CEO Alexey Kirienko.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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