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Elon Musk is serious about crypto as Tesla puts $1.5 billion in bitcoin

Anthony Pompliano, Partner, Morgan Creek Digital Assets and Dan Ives, Wedbush Securities Managing Director join the Yahoo Finance Live panel with the latest on Tesla announcing that it bought $1.5 billion worth of bitcoin, according to a filing with the SEC.

Video Transcript

ZACK GUZMAN: I want to shift our attention back over to the big mover today. Take a look at Bitcoin here as it catches a more than 14% boost on the heels of an announcement this morning from Tesla, that the company would be putting in $1.5 billion into Bitcoin, and would be accepting Bitcoin as a form of payment later on in the future. It's a big move. Tesla shares are also in the green off that Bitcoin, the big mover here today.

To break down the importance of this shift, I want to bring on two guests here. Anthony Pompliano is Morgan Creek Digital Assets partner, the man they call "Pomp," alongside Dan Ives, Wedbush Securities Managing Director, for reaction on the Tesla side.

And Pomp, let's start with you, as Bitcoin's the big mover off this. And, you know, to use Elon's own words, maybe this was, in retrospect, inevitable, but it seems like a big shift. What do you make of the move?

ANTHONY POMPLIANO: Yeah, look, I think that every corporation is going to have to do this, right? We saw, over the last 12 months or so, individuals and financial institutions woke up to the fact that the purchasing power of the dollar is being destroyed, and they went on this global scavenger hunt, looking for an asset that they could essentially protect their wealth, or protect their balance sheets. And so, naturally, when you get individuals and financial institutions doing it, corporations will do it, and eventually central banks will do it. And so, it's just a matter of time. I think this is the kind of adoption of an asset, and we're watching it in real time.

AKIKO FUJITA: Dan, from a fundamental standpoint, which is more significant in the news that we got today? Is it that $1.5 billion investment into crypto, or is it the fact that consumers can now purchase a Tesla using Bitcoin?

DAN IVES: I think for now it's about the investment, because that's something we saw with MicroStrategy and Saluran, and now seeing it with Tesla and Musk. And that's probably right now front and center for investors. A lot of my calls this morning, is this going to be something we're going to see more and more? Could be $3 to $4 billion in Bitcoin. I think it just shows Musk-- he's talked the game, but now walking the walk.

When you talk about the transactional piece, that's significant as a tell, especially over going into the coming years. I think this really could have a ripple effect across other automakers, as well just more transactions we see in terms of Bitcoin, and more and more solidifies that thesis that this is something we're going to see more and more of. Especially with someone like Musk putting his power behind it.

ZACK GUZMAN: Yeah, and also with a company like Tesla, which I think is really levered to, maybe, people who might understand Bitcoin might have already invested, might have gotten rich off of investing in Bitcoin. But Pomp, I mean, when you look at it, it was a move that you were actually even pressing him to make on Twitter. You were tweeting at Elon Musk about this specifically.

When you assess maybe where the adoption is right now, it might not be surprising for someone like Elon Musk to make a move like this, but I mean, in your realistic expectations for other companies to follow suit, where would you look next, and how soon do you think that this trickle effect might start taking place?

ANTHONY POMPLIANO: When we look at adoption, we have to remember there's about 100 million people who have exposure to this asset. There's more on-chain transaction volume last year than on Apple Pay, Venmo, or PayPal. And so, just the adoption is there in a very material way. When we look at other publicly traded companies, obviously you have MicroStrategy, who kind of first really went headfirst into this. You've got Square. Now you've got Tesla. I would immediately look to Amazon, Apple, even maybe a Walmart, just companies that naturally have large balance sheets, who have forward-thinking executive teams, and also have some sort of technology understanding.

I mean, one of the things that's not getting talked about the Tesla story is it's a sustainable energy company. And so, it would not surprise me whatsoever if, at some point, in the next 18 to 24 months, we see Tesla doing other things around Bitcoin. What would it take for them to say, hey, we need a better way to store energy. And so, rather than continue to do that just with battery packs and that technology, what if they start to actually build mining facilities? Elon Musk and a lot of the people around him have great experience in building large industrial-type operations, and so, if Tesla was to get into the Bitcoin mining space, you could see that being interesting.

So I think you just got to kind of zoom out a little bit, and look at the bigger picture. Yes, it's important that they're buying the actual asset itself, and other public companies will do that. But also, I think this is going to become something where companies are going to start saying, hey, how do we actually start to participate? We've seen Square make a great amount of revenue off of this, and so, I think other companies will start to do it as well, from Tesla, all the way up to the Amazons of the world.

AKIKO FUJITA: Dan, you mentioned the potential for Tesla to get into other cryptocurrency. Right now, we're just talking Bitcoin, but potentially, in terms of the valuation of the company, you start to look at this company's ability to acquire and hold digital assets. That adds to the company's case here. You've got a $950 price target, and you say you're not changing it because of the news today, but if Elon Musk decides to expand this part of the business, would that make you a little bullish on the stock, or would you be a little concerned about putting the cash on hand to something like cryptocurrency?

DAN IVES: I think right now we continue to be focused on the EV arms race, in terms of where Tesla is, and continuing to gain share, where we will go into a golden age for EVs. That's the focus fundamentally of the stock. But as we've seen with MicroStrategy, and in that move, no doubt, it definitely continues to sort of add to some of the momentum here. But I do think it's a slippery slope, because I think when you're looking at a Tesla, It's all about EV in the fundamental game. Bitcoin diversification is great. We'll see what happens on the transaction side.

But I think it's also important not to get over their skis, because then all of a sudden it becomes a sideshow that maybe overshadows what, right now, continues to be front and center for investors, which is the EV arms race. Trillion dollars being spent over the coming years, especially with GM, Ford, and others going after it.

ZACK GUZMAN: Yeah, because to me, I mean, obviously it's a big crypto story. It's a big Tesla story. That's why we're discussing both here together in this segment. But it's interesting, because they also left the door open, right? It wasn't just Bitcoin. It was digital assets, holding those from time to time. And Pomp, I mean, we've seen Elon talking about Dogecoin, that was at an all-time high as he was talking about it over the weekend. That would probably start to be-- where Dan's talking about getting into the weeds here. That would probably be it.

But it doesn't seem out of the realm of possibility that Doge could be next. I mean, where do you maybe look at the rest of the crypto market right now off this move, considering we've had a lot of guys talking about Ether. The ability is there. It seems like Bitcoin is a gateway drug, if you will, to kind of get people interested in the crypto space. But the upside is still pretty large for some of these other coins.

ANTHONY POMPLIANO: Yeah. If we just stick to the conversation of publicly traded companies, I don't see them putting anything on their balance sheet other than Bitcoin any time soon. Michael Saylor, Bitcoin maximalist, Jack Dorsey, Bitcoin maximalist. Elon, for everything that I understand, Bitcoin maximalist, plus kind of this meme coin, Doge.

And so, I think what we really got to kind of just look at-- it's fun to joke around on the internet. It's fun to kind of have entertainment, but when it comes to shareholder value and the balance sheet, I just don't see them putting anything else in. Maybe that changes at some point in the future. But as of right now, I think Bitcoin is the only asset both from a market cap standpoint, regulatory standpoint, and also the de-risking standpoint to be put on any corporate balance sheet.

ZACK GUZMAN: Yeah just one last point here, too, for me.

AKIKO FUJITA: We're going to continue to watch space Elon Musk always has us talking about, right? I mean, if anything, he is a hype machine, dare we say, but we're certainly talking about it. Interesting to see the moves on both ends here. Anthony Pompliano, partner, Morgan Creek Digital Assets and Dan Ives, Wedbush Securities Managing Director. Our thanks to both of you for joining today.