On Wednesday evening, the car manufacturer Tesla (TSLA) released the figures for the past quarter. All analysts’ expectations were exceeded with a significant increase in sales and profits. Revenue for the first quarter of 2022 was $18.76 billion. Analysts had forecast just $17.80 billion. Revenue increased 81 percentage points from the prior year quarter ($10.39 billion in the first quarter of 2021) to the north. Tesla made about $3.3 billion in the first quarter of this year, boosting its profits by 658% compared to the same period last year.
Tesla is also the second largest Bitcoin holder among listed companies with 42,902 BTC. The value of this deposit is currently approximately US$1.8 billion.
How have the prices of the most expensive automaker fared against the cryptocurrency since the Corona trend fell? Is there a correlation between the evolution of the prices of the two assets? And is Tesla even showing up and down cycles similar to the biggest cryptocurrency Bitcoin?
For optimal comparison, the percentage price changes for the past two business years have been broken down into five different sub-segments. Three of these segments represent bullish bullish moves, while two segments represent corrective moves.
The first round of increases from March 14, 2020 to Bitcoin’s all-time high on April 21, 2021 shows almost equally strong percentage increases for both assets. While Tesla was able to increase its value by 1,123% at its peak in this trading range, Bitcoin shows a percentage increase of 1,209 percentage points. Bitcoin was thus able to slightly outperform the all-electric automaker.
2nd step :
During the subsequent corrective move from April 21 to May 19, 2021, the automaker’s price consolidated by 26 percentage points, while Bitcoin corrected by 44% over the same period. Here, Tesla performs significantly better than the crypto-key currency. If the duration of the corrective move were extended to Bitcoin’s all-time low on July 20, 2021, Bitcoin’s percentage rebate would be almost twice as high at 53 percentage points from the all-time high. This development proves that the largest cryptocurrency behaves more volatile than its technological counterpart.
In the next round of increases from May 20 to November 9, 2021, the two assets again move north together and post percentage increases of 120% (Tesla) and 129 percentage points (Bitcoin) respectively. Interestingly, the two assets not only show equally strong percentage increases, but also reached their highs during the first trading week of November 2021. This parallel price movement indicates a strong correlation of Tesla stock by relative to the evolution of Bitcoin prices.
The subsequent correction in both assets saw Tesla consolidate by 38%, while Bitcoin fell by 48% over the same period from November 10, 2021 to March 14, 2022. Despite a temporary northward spike in Tesla at the start of year, a similar corrective movement is also evident here.
The upward movement currently underway since March 15 of this year shows a percentage increase of 14 percentage points for Bitcoin and 39% for Tesla as of today, Thursday April 21, 2022. Thanks to quarterly figures exceptional, Tesla can currently decouple somewhat from Bitcoin and increase more than double in comparison.
It remains to say that the two assets show a very similar price development. Although Tesla was able to significantly outperform Bitcoin price action over the considered period of two good trading years (1,162% vs. 492%), the bull and correction cycles show great parallels. Given a very “sporty” valuation of Tesla stock, with a price/earnings ratio (P/E) above 100, Tesla’s upside potential seems limited in the long term.
The current stock market valuation of over US$1 trillion sometimes looks stretched compared to other automakers such as Toyota and Volkswagen, despite the recent increase in profits.
On the other hand, the long-term price potential of the key cryptocurrency Bitcoin is estimated to be much higher. A market capitalization of around US$900 billion currently should offer more potential for the price of BTC in the long run with continued high adoption of Bitcoin as a store of value and increasingly as a means of payment.
Disclaimer: The price estimates presented on this page do not represent buy or sell recommendations. They are only an evaluation by the analyst.
The images in the chart were created using TradingView created.
USD/EUR exchange rate at time of writing: 0.92 EUR.
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