Should I invest in Tesla stock after it bought $1.5 billion in Bitcoin (BTC)?

Shares of Tesla (NASDAQ: TSLA) are trading about 2% higher today after the electric car maker announced it invested $1.5 billion in Bitcoin (BTC). 

Fundamental analysis: A “major move” by Tesla

In the hottest story of the day, Tesla said it has bought $1.5 billion worth of Bitcoin (BTC) that will allow for “more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity,” the company said in an SEC filing. 

Moreover, it expects to “begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”

Tesla’s CEO Elon Musk is known to be a big supporter of Bitcoin and cryptocurrency with numerous tweets sent in support of Bitcoin – and Dogecoin (DOGE) – lately. 

However, today’s news marks the first actual move by one of the world’s largest companies in accelerating the widespread adoption of Bitcoin. 

Wedbush analyst Daniel Ives sees Tesla’s decision as a “significant strategic move”.

“This morning’s news formalizes the strategy of Musk and Tesla diving into the deep end of the pool of bitcoin and crypto. From a stock perspective, as we have seen with Microstrategy (and Saylor), this move could put more momentum into shares of Tesla as more investors start to value the company’s bitcoin/crypto exposure as part of the overall valuation. 

“Ultimately, investors and other industry watchers will be watching this closely to see if other corporations follow the lead of Tesla on this crypto path or on the other hand does it remain a contained few names that make this strategic jump around bitcoin,” Ives wrote in today’s note.

Technical analysis: Tesla stock heading higher again?

As Ives believes that buyers of Tesla shares may push the price north of current levels amid higher Bitcoin/crypto exposure, we take a look at technical levels in the short-term. 

Tesla daily chart (TradingView)

Shares of the company gapped over 2% higher today before pulling back to trade around 1.6% in the green on the day. 

Tesla stock price is still trading near the record highs but in a corrective fashion. A series of the lower highs is signalling a corrective move lower with the low of $780 printed on January 29 marking the initial horizontal support line. 

As seen in the chart higher, the price action only corrected to 23.6% since making a huge push higher since October last year. This means that we may witness a near-term correction with $780 and the area around $700 offering a chance to get on the long side of the market. 

Summary

Tesla stock price is trading moderately higher on BTC news today with the inability to stage a stronger rally potentially signalling exhaustion in the buyers’ resolve. Hence, it may be wise to wait for a pullback before investing in Tesla stock. 

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