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What Do The Pros Think About Tesla's Bitcoin Investment?

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Jayson Derrick
·2 min read
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Tesla Inc (NASDAQ: TSLA) investor Ron Baron says the company's decision to invest $1.5 billion in Bitcoin (BTC) and accept the digital currency as a payment option is "not surprising."

Musk Likes Bitcoin: Tesla CEO Elon Musk has been "commenting favorably" on bitcoin for a while, Baron said in the statement to CNBC. It's likely Tesla is not "speculating on the price of bitcoin," rather using it as a payment system.

Other heavyweight investors such as Stanley Druckenmiller and Paul Tudor Jones, CIO of Tudor Investment Corp., are equally bullish on bitcoin, while companies like Paypal Holdings Inc (NASDAQ: PYPL) are building out its digital currency offerings.

"I'm sure a lot of thought went into bitcoin purchase by Tesla and I look forward to learning the rationale," according to Baron, the CEO, chairman and portfolio manager of Baron Funds.

Related Link: 15 Bitcoin Stocks To Watch On Tesla News

Loup Ventures' Gene Munster also likes the move.

"Tesla has money to lose with $19 billion in assets," Munster told Benzinga. "Yes, Bitcoin can move the needle for Tesla. If it goes up 10x, that's $15 billion to Tesla. That's real money."

Bitcoin Investment: Tesla's decision to allocate around 7.5% of its total cash into bitcoin and could be seen as a signal to customers it "understands where the world is going," Galaxy Digital CEO Michael Novogratz told CNBC. People want to do business and invest in companies that are looking forward to the next 100 years — not the last 100 years.

On the other hand, Musk shouldn't be tweeting about Dogecoin as the digital currency's appreciation has reached a point where some people will lose a lot of money, he said. The digital coin has no real purpose, unlike bitcoin or Ethereum and others.

"It was funny for a little bit," Novogratz said.

See also: How to Invest in Tesla Stock

Hard To Prove Any Manipulation: Musk has been bullish on bitcoin for some time and this begs the question if his public comments can be seen as market manipulation. Muddy Waters Research Founder Carson Block said he doesn't think this is the case.

Musk is far from the only notable persona in the investment community to publicly comment on what he is bullish on. Musk's comments are no different from Chamath Palihapitiya confirming he is long GameStop Corp. (NYSE: GME) call options.

Meanwhile, the U.S. Securities and Exchange Commission "does not have a record of success" against Musk, Block told CNBC. As such, any investigation would likely lead to a "dead end."

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