Why Tesla Stock Jumped on Wednesday

Motley Fool2021-06-24
Is a rebound in Bitcoin on Wednesday impacting the electric-car maker's stock?

What happened

Shares of electric-car maker Tesla(NASDAQ:TSLA) rose sharply on Wednesday. The stock rose as much as 5.2%. As of 1:10 p.m. EDT, however, the stock was up 4.7%.

The automaker's stock was likely trading higher due (in part) to a sharp jump in Bitcoin prices. In the past, Tesla shares have moved sharply up or down on days of volatile Bitcoin trading. Investors often associate the car company with Bitcoin because it has bought $1.5 billion worth of the cryptocurrency. But an upbeat day for somegrowth stockslike Tesla may be helping as well.

So what

Bitcoin has rebounded more than 15% after briefly sinking below $30,000 on Tuesday. As of this writing, Bitcoin is trading near $34,000.

Some investors may be concerned about how Bitcoin's price at the end of Tesla's second quarter could impact the company's reported profits. The recent rebound in the cryptocurrency's price may soothe some concerns about how a falling price in the digital coin could impact the company's earnings report -- though there's no telling where the digital coin will be trading at the end of the period.

Tesla shares may also be getting a boost from recent momentum in growth stocks.

Now what

Investors should keep in mind that Tesla's Bitcoin investment is small relative to the automaker's total cash balance. The company wrapped up Q1 with $17.1 billion of cash and cash equivalents. Tesla's Bitcoin investment is particularly small in relation to the company's $630 billion market capitalization.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Yuheng231
    2021-06-25
    Yuheng231
    Woohoo
  • 3abdfd2f
    2021-06-24
    3abdfd2f
    Tesla to moon
  • Sweegull
    2021-06-24
    Sweegull
    Tesla or Nio?!
  • veryfatbunny
    2021-06-24
    veryfatbunny
    To the moon
  • sgric
    2021-06-24
    sgric
    I guess it's the potential of FSD income and also lowered inflation estimates in the coming months. 
  • BenjaminLim
    2021-06-24
    BenjaminLim
    Its because of lower inflation risk concern andlower growth in recovery stocks. Therefore growth stocks are the way now! 
Leave a comment
29