Corporate America cannot avoid talking about bitcoin. Tesla is to blame

Corporate America cannot avoid talking about bitcoin. Tesla is to blame

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Wall Street analysts have chipped executives at other high-profile companies about possible bitcoin outages during recent revenue conferences.

GM (GM) Mary Barra, CEO, said earlier this month during the carmaker’s earnings that GM had not yet planned to buy bitcoin.

“We have no plans to invest in bitcoin, so there’s a point,” she said in response to a question from Morgan Stanley car analyst Adam Jonas.

But she does not rule out the possibility that customers may one day buy Chevrolets, Buicks or Cadlllacs with a cryptocurrency – just as Tesla plans to allow customers to use bitcoin to buy its electric cars and trucks.

“This is something we will monitor and evaluate. And if there is a strong customer demand for it in the future, there is nothing stopping us from doing so,” Barra added.

But executives of other companies, especially financial companies, do not remain convinced that bitcoin should be part of their cash management strategies.

“We are not currently investing in cryptocurrency,” said Leslie Barbi, chief investment officer. America Reinsurance Group (RGA), during a revenue conference call last week.

“My current understanding is that accounting is different from other currencies and could create more volatility,” she added.

Everything you need to know about bitcoin

Volatility is a problem. The big swing in price is likely to prevent other big companies from putting corporate money into bitcoin.

Certainly, the returns were very late. But companies want stability through their corporate investments – not an asset that has swung from a low of just over $ 4,000 to almost $ 50,000 in the past year.

“We’re looking at cryptocurrencies,” Voya Financial CEO Christine Hurtsellers’s investment management unit said during an earnings call. But she added that factors that cause the large price fluctuations can sometimes be a little opaque at times. This is why Voya (VOYA) will not invest for the time being.

Take the crypto dive

Other companies are willing to accept the risk.

So far, Tesla (TSLA) and software company MicroStrategy (MSTR) are the two most prominent businesses to buy bitcoin. Payment giant Square (SQ) and PayPal (PYPL) now let customers buy and sell bitcoin (XBT) and use the crypto-currency for e-commerce transactions. MasterCard (MA) and Bank of New York Mellon (BK) also dipping their toes into the waters of digital currencies.
Twitter (TWTR), which, like Square, is run by Jack Dorsey, also looks more at bitcoin and other cryptocurrencies.
‘We thought a lot beforehand to consider how we can pay employees if they ask to be paid in bitcoin, how we can pay an entrepreneur if they ask to be paid in bitcoin and whether we should have bitcoin on our balance Ned Segal, chief financial officer of Twitter, said an interview with CNBC after the company reported its earnings last week.
Visa (V) CEO Al Kelly also noted during his recent earnings call that ‘there is a growing interest in digital currencies’.

But he distinguishes between assets such as bitcoin and so-called stable currencies backed by existing government currencies. Kelly said bitcoin and other cryptocurrencies are more like ‘digital gold’.

“They are primarily held as assets that are not significantly used as a means of payment at this stage,” Kelly said, adding that fiat-backed digital currencies, including stable currencies and central bank digital currencies. an emerging payment innovation that could have the potential to be used for global trade. ‘

In other words, buying Tesla may lead more companies to consider buying bitcoin, but it is unlikely to offer much support yet.

The biggest game card

Some hope so appeal (AAPL), the world’s most valuable company, can be next. Apple can get buyers and sellers to trade bitcoin, and also invest directly in cryptocurrencies like Tesla is.
Bitcoin rises, and this is the first time $ 50,000

RBC analyst Mitch Steves said in a report earlier this month that if Apple decided to set up its own cryptocurrency exchange business (possibly through its Apple Wallet feature), Apple ‘would immediately have a market share. could win and disrupt the industry.

Based on how much money Square earns from bitcoin-related revenue, Steves estimates that Apple could eventually generate more than $ 40 billion in revenue linked to bitcoin.

He also noted that Apple could fund any bitcoin exchange plans by adding about $ 1 billion to its balance sheet, saying that an Apple purchase of bitcoin would help further validate it and that the price of the underlying asset would then increase significantly. would rise. “

Apple has not publicly discussed plans to invest in bitcoin, and the company has not responded to requests for comment.

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