On Wednesday evening, the car manufacturer Tesla (TSLA) reported the figures for the past quarter. All of the 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 only expected $17.80 billion. Revenue rose a significant 81 percentage points from the prior-year quarter ($10.39 billion in Q1 2021) northward. Tesla made about $3.3 billion in the first quarter of this year, growing profit by a remarkable 658 percent over the same period last year.
Tesla is with 42,902 BTC also the second-largest Bitcoin holder among listed companies. The value of this deposit is currently around 1.8 billion US dollars.
How have the prices of the most expensive car manufacturer developed in relation to the crypto currency since the Corona trend low? Is there a correlation between the price developments of both assets? And does Tesla even show similar rise and correction cycles as the largest cryptocurrency Bitcoin?
For an optimal comparison, the percentage price changes of the last two trading years have been broken down into five different sub-segments. Three of these segments represent bullish bullish moves, while two segments represent corrective moves.
Stage 1:
The first cycle of increases from March 14, 2020 to Bitcoin’s historical high on April 21, 2021 shows almost equally strong percentage increases for both assets. While Tesla was able to increase in value by 1,123 percent at its peak in this trading range, Bitcoin shows a percentage increase of 1,209 percentage points. Bitcoin was thus able to marginally outperform the manufacturer of fully electric automobiles.
Stage 2:
In the subsequent corrective move from April 21 to May 19, 2021, the carmaker’s price consolidated by 26 percentage points, while Bitcoin corrected by 44 percent over the same period. Here Tesla shows a significantly better performance than the crypto key currency. If the time span of the correction movement were extended to the absolute price low of Bitcoin on July 20, 2021, the percentage discount of Bitcoin would be almost twice as high at 53 percentage points from the historical high. This development proves that the largest cryptocurrency is behaving more volatile than its technology counterpart.
Stage 3:
In the subsequent cycle of increases from May 20 to November 9, 2021, both assets once again climb north together and show percentage increases of 120 percent (Tesla) and 129 percentage points (Bitcoin) respectively. Interestingly, both assets not only show similarly strong percentage increases, but also reached their highs in the first trading week in November 2021. This parallel price development indicates a high correlation of the Tesla share compared to the price development of Bitcoin.
Stage 4:
The subsequent correction in both assets saw Tesla consolidate by 38 percent, while Bitcoin slipped by up to 48 percent in the same period from November 10, 2021 to March 14, 2022. Despite a temporary spike northwards at Tesla at the beginning of the year, a similar corrective movement is also evident here.
Stage 5:
The currently ongoing upward movement since March 15 of this year shows a percentage increase of 14 percentage points for Bitcoin and 39 percent for Tesla as of today, Thursday, April 21, 2022. Thanks to the outstanding quarterly figures, Tesla can currently decouple itself somewhat from Bitcoin and increase more than twice as much in comparison.
Conclusion:
It remains to be said that both assets show a very similar price development. Although Tesla was able to significantly outperform the price development of Bitcoin over the considered period of a good two trading years (1,162 percent vs. 492 percent), the rise and correction cycles show great parallels. In view of a very “sporty” valuation of Tesla shares, with a price/earnings ratio (P/E) of more than 100, Tesla’s upside potential seems limited in the long term.
The current market valuation of more than one trillion US dollars seems stretched at times 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 currently around 900 billion US dollars should offer more potential for the BTC price in the long term with continued high adoption of Bitcoin as a store of value and increasingly also as a means of payment.
Disclaimer: The price estimates presented on this page do not represent buy or sell recommendations. They are merely an assessment by the analyst.
The chart images were created using TradingView created.
USD/EUR exchange rate at the time of going to press: EUR 0.92.
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