| Elon Musk, founder and CEO of electric vehicle maker Tesla (NSDQ: TSLA), recently announced that he bought $1.5 billion of Bitcoin with company funds. In a recent tweet, the billionaire entrepreneur acknowledged that the price of Bitcoin does "seem high." Musk also opined that "Money is just data that allows us to avoid the inconvenience of barter." In his opinion, Bitcoin minimizes the risk of "latency & error" in storing wealth in a currency until it is spent. In that case, it makes sense for a large corporation to use Bitcoin as an alternative to cash. But back to my original question: Is that a good reason for you to buy stock in a company? Square, Hip and Trendy That question came to mind last week when financial services firm Square (NYSE: SQ) released its 2020 Q4 and full-year results. At the same time, the company announced that it recently bought $170 million of Bitcoin. Combined with a previous purchase of $50 million, Square holds approximately 5% of its cash in Bitcoin. Unfortunately for Square, neither its fourth-quarter results nor its Bitcoin transaction impressed Wall Street. The following morning, its share price dropped 10%. However, the stock was still up 50% over the past six months so a price correction of that magnitude only puts the stock back to where it was trading three weeks prior. At the same time, shares of Tesla fell below $700 after cresting $900 one month earlier. The fact that both stocks dropped shortly after their Bitcoin purchases should not be blamed on those transactions. However, it is apparent that the emergence of Bitcoin as an asset on their balance sheets did not help them, either. I expect more companies will boldly pronounce their Bitcoin purchases in the weeks and months to come. The cryptocurrency market is hot and nobody wants to be left out. Especially in the tech sector, where being trendy is not only hip but necessary to remain relevant. As other companies announce their Bitcoin purchases, I expect its price to climb higher. That will drive up the value of Bitcoin on the books of the companies that own it, but not enough to influence their share prices. Until that currency is spent, there is no way for analysts to judge what the return on those investments might be. For that reason, it does not make sense to buy stock in a company simply because it owns Bitcoin. The right reason to own a stock is the same as it has always been. You believe that business will thrive, which eventually will result in higher earnings that will drive its value higher. Editor's Note: Our colleague Jim Pearce just provided you with commonsense investment advice. You should also consider the advice of another expert on our staff: Amber Hestla, chief investment strategist of the trading services Income Trader, Profit Amplifier, Maximum Income, and Precision Pot Trader. Amber isn't just a veteran of Wall Street. She's also the veteran of a shooting war in the Middle East. She served in Operation Iraqi Freedom. While deployed overseas with military intelligence, she learned the importance of interpreting data to forecast what is likely to happen in the future. Right now, as an investment analyst in the civilian world, Amber wants to send you a brand new P.I.N. that gives you a shot at instant cash. This number will work so steadily every week, you'll begin to think of its payout as an extra "paycheck." To learn the specifics of how Amber's P.I.N. works, click here now. | 
Tidak ada komentar:
Posting Komentar