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Tesla's (NASDAQ: TSLA) recent purchase of Bitcoin may already be quite profitable. Wedbush Securities estimates Tesla has generated roughly $1 billion in return on its investment. The analyst suggests that the company is looking to get more out of its Bitcoin investment than it does from selling its electric vehicles throughout 2020.
On February 8, Tesla announced that it has updated its investment policy to give itself more flexibility to further diversify and increase the return on its cash, and has acquired $1.5 billion in Bitcoin cryptocurrency. Although the purchase price of the crypto coin was not disclosed, it is reported that the purchase was made in January.
Daniel Ives, an analyst at Wedbush Securities, estimates Tesla has already made about $1 billion in returns from its Bitcoin investment. On February 20, in his note, he wrote that the company is “on a trajectory to make more from its Bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020.”
The analyst did not explain how he got to that calculation. The bitcoin price rose from an intraday high of $34,793 on January 31 to an intraday high of $57,487 on February 20, according to CoinDesk, which corresponds to a 65% rise. Thus, with an investment of $1.5 billion, the profit could have amounted to $975 million (according to CNBC calculations).
“While the Bitcoin investment is a side show for Tesla, it’s 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,” Ives wrote.
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