Massively overpriced Tesla has just thrown $1.5 billion into purchasing the massively overpriced cryptocurrency bitcoin, in a classic example of one bubble huffing and puffing to blow up another bubble.
Well, when I say classic, that's probably not quite the right term, given that this has probably never happened before, at least not in this way.
Tesla has been recognized as dangerously overvalued for some time now, having surged five-fold over the last year or so. Per JP Morgan in December 2020: "Tesla shares are in our view and by virtually every conventional metric not only overvalued, but dramatically so". Clear enough?
I haven't written about bitcoin for some time now, but since that time it has also surged about five-fold and is considered dangerously overvalued. People seem to have pretty much given up on bitcoin ever operating as a serious financial instrument, and are just treating it as a game at this point.
So, Tesla deciding to buy into bitcoin instead of paying off some if its $11 billion in debt is a bizarro move by Tesla's ever-bizarro leader Elon Musk. You can look on it as predictably unexpected. But you would think that the stock exchange would throw up its metaphorical hands in horror, no? Instead, what actually happened? Tesla's share price went UP, and investors appear to be perfectly OK with the world's most overpriced company piling into the world's most volatile speculative investment.
Call me old-fashioned, but it all makes me very glad our savings are tied up in boring old blue-chip stocks.
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