Update (0815ET): Wedbush celebrity tech analyst Dan Ives, known for being one of Apple's biggest champions on the Street, has hailed Tesla's decision to start accepting payment in bitcoin as "a seminal moment" for both Tesla, and bitcoin.
Ives shared his view on Tesla's decision in a note to clients Wednesday, a copy of which was obtained by Bloomberg. In it, he said he expects less than 5% of Tesla’s transactions will involve bitcoin over the next 12-to-18 months, although over time, as crypto sees greater adoption, that number could rise.
"Tesla accepting bitcoin as a form of payment for its products/cars is a potential game changing move for the use of Bitcoin from a transactional perspective,” the analyst said.
Ives maintained his "neutral" rating on Tesla stock, and his $950/share price target, which is nearly $300 more than where the shares were trading at Tuesday's close.
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Tesla CEO Elon Musk tweeted in the early hours of Wednesday morning that Tesla customers can now officially pay for their cars with bitcoin.
The decision, announced in a series of early-morning (or late-night, depending on which coast you're on) tweets from Musk, who said the option would only be available to American customers - though he said international customers would be able to use bitcoin as payment "later this year."
What exactly does Tesla plan to do with that Bitcoin? According to Musk, any bitcoin paid to the company will be retained as bitcoin, not converted to fiat. Musk added that Tesla is operating its own bitcoin nodes (so the company presumably won't need to depend on a third party like Goldman Sachs with its crypto trading desk).
You can now buy a Tesla with Bitcoin— Elon Musk (@elonmusk) March 24, 2021
Tesla is using only internal & open source software & operates Bitcoin nodes directly.— Elon Musk (@elonmusk) March 24, 2021
Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency.
Pay by Bitcoin capability available outside US later this year— Elon Musk (@elonmusk) March 24, 2021
Tesla, like a handful of far-less-high-profile companies, financed massive purchases of bitcoin with debt. The company announced its purchase of $1.5 billion in bitcoin in February.
Bitcoin rallied 5% after Musk's tweets after treading water during most of the overnight session.
But even more so than bitcoin, so-called crypto stocks rallied hard on the news: Ebang (+9.7%), Riot Blockchain (+6.8%), Marathon Digital (+5.4%), Bit Digital (+5%) all rallied on the news, while Tesla shares ticked higher 1.1% (though it's still red YTD). In Europe, the big winners were Argo Blockchain (+5.9%) and Arcane Crypto (+3.2%).