Musk's bitcoin bet fuels gains in companies already invested
10/02/2021 06:00
By Noel Randewich
Feb 10 (Reuters) - Shares of companies that have invested in
bitcoin have vastly outperformed on Wall Street in 2021 and are
extending their gains thanks to Tesla's TSLA.O $1.5 billion
bet on the soaring digital currency.
The price of bitcoin BTC=BTSP hit a record high over
$48,000 on Tuesday in a two-day surge after Tesla said on Monday
that it had bought the digital currency and would soon accept it
as a form of payment for cars. urn:newsml:reuters.com:*:nL4N2KE3BF
A handful of bitcoin-related companies listed on U.S. stock
exchanges were also buoyed by the disclosure that Tesla CEO Elon
Musk, a fan of cryptocurrencies, added bitcoin to the electric
car maker's balance sheet.
Tesla's bitcoin purchase amounts to a minor bet for the
fast-growing electric car company with an $800 billion stock
market value. However, it bolstered the digital currency's
emerging credentials as a mainstream financial asset.
Driven in part by interest from institutional investors, the
price of bitcoin has quadrupled in the past four months, surging
far beyond record highs set in 2017. Some investors view it a
hedge against inflation.
Tesla gained after disclosing the investment on Monday, but
dipped 1.6% on Tuesday, leaving its gain in 2021 at 20%,
compared to the S&P 500's .SPX 4% rise.
Companies with much more significant exposures to bitcoin in
proportion to their overall stock market value than Tesla have
also rallied following Tesla's disclosure, increasing already
strong stock gains driven by the cryptocurrency's recent rally.
MicroStrategy MSTR.O , whose CEO Michael Saylor is an avid
bitcoin bull, surged 22% on Tuesday, bringing its gain this week
to over 50%, and it has surged over 200% so far in 2021. The
business intelligence software company has bought about 71,079
bitcoins, now worth over $3 billion and equivalent to over a
quarter of its $11.8 billion stock market value.
Canadian financial technology firm Mogo MOGO.TO , which in
December said it would invest up to 1.5 million Canadian dollars
in bitcoin, jumped 45% on Tuesday, bringing its gain since
Tesla's announcement to 85% and giving it a stock market value
of $318 million.
Payments company Square SQ.N dipped almost 1%, leaving its
2021 gain at 19%. In October, Square said it bought 4,709
bitcoins for about $50 million, amounting to about 1% of its
total assets at the end of the second quarter of 2020. Those
bitcoins are now worth over $200 million.
Marathon Patent Group MARA.O , a bitcoin mining company
that in January announced it bought nearly 4,900 bitcoins for
$150 million, has jumped over 60% this week and is up 260% year
to date.
PayPal Holdings PYPL.O joined the cryptocurrency market in
October, allowing customers to buy, sell and hold bitcoin and
other virtual coins using the U.S. digital payments company’s
online wallets. Its stock has surged 21% in 2021.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Soaring shares of companies that own bitcoin https://tmsnrt.rs/3rCxF4a
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Noel Randewich; editing by Megan Davies and Sonya
Hepinstall)
((noel.randewich@tr.com; (415) 677 2542, Twitter: @randewich;))