$50B wiped from Tesla after BTC buy — but MasterCard and Twitter surge

Electric car manufacturer Tesla has seen more than $55 billion wiped from its market cap since announcing the purchase of $1.5 billion in Bitcoin four days ago — but Twitter and MasterCard have headed in the other direction.

Since Tesla’s announcement on Monday, the electric car giant’s stock price has dropped 7% from $869.52 ($834.6 billion market cap). It is currently trading at $811.66 ($779 billion market cap).

While there may be other factors behind the share price drop, some investors, such as Baker Avenue Wealth Management chief strategist King Lip, are concerned that holding 8% of the company's cash reserve in a volatile asset is an unnecessary risk, stating:

“It will add volatility to the stock due to exposure to Bitcoin. This is better for Bitcoin than it is for Tesla.”

Tesla stock has been known to disregard the opinion of financial analysts in general with financial magazine Barron’s stating no more than 40% of analysts have rated its shares a ‘Buy’ since 2018.

Former Bernstein analyst and Bitcoin skeptic Gary Black stated two weeks earlier that he would sell his Tesla stock if they added Bitcoin to the balance sheet. True to his word, he announced his exit on Twitter, but also added that he will get back in:

3/ I’ve made a lot of money on $TSLA over the past 18 months, and will look for a lower entry point to get back in. I will continue to post my views on Twitter about TSLA volumes, earnings and other developments. I thank everyone for your past and hopefully continued support.

— Gary Black (@garyblack00) February 8, 2021

Only 90 minutes later he revised his prediction for the carmaker’s stock to $960 dropping only $40 from the previous estimate of $1,000. This led some Twitter users to question if he really believes his figures since he had just exited his position.

Included in the sell-off was Elon Musk’s younger brother and Tesla director Kimbal Musk, who sold 5% of his shares for $25.6 million. Another director, Antonio Gracias, also sold more than 150,000 shares one day after the Bitcoin announcement, according to securities filings.

Despite the timing, there is no evidence that these sales are related to the recent Bitcoin news. And for that matter, it's unclear of what impact the Bitcoin buy had on the share price, given news also broke this week that Tesla had been called in by Chinese government regulators for talks over quality issues in its electric cars.

It's also clear that not all stock investors are Bitcoin-adverse. Social giant Twitter’s stock surged following comments that the firm might soon buy into Bitcoin. During an interview on CNBC’s Squawk Box on February 10, the tech firm’s chief financial officer Ned Segal said the company is considering adding the cryptocurrency to its own books and using it for Twitter employee’s salaries.

"We've done a lot of the upfront thinking to consider how we might pay employees should they ask to be paid in #bitcoin, how we might pay a vendor if they asked to be paid in #btc and whether we need to have #btc on our balance sheet," says @NedSegal $TWTR. pic.twitter.com/KjIgnqDmYC

— Squawk Box (@SquawkCNBC) February 10, 2021

In the two days following the interview, Twitter stock rose almost 15% from $59.88 to $68.56, just shy of its all-time high of $69.

Similarly, MasterCard stock surged 4% following the announcement that it will support multiple cryptocurrencies on its network this week.

Big companies investing in Bitcoin will not necessarily translate to a much higher market cap: if Apple, Microsoft, Facebook, Twitter, MasterCard, and Google were to invest 8% of their cash reserves in Bitcoin, this would only translate into less than US$8 billion investment in total. That's less than 1% of Bitcoin’s current market cap. However, the signal it sends would likely drive other companies and retail investors to jump on the bandwagon.