Earlier this week $TSLA announced that it bought $1.5B worth of Bitcoin. Since then other companies, including $TWTR and $UBER have made some noise about purchasing some, and others have speculated about $AAPL or $AMZN purchasing some.
One event does not a make a trend, and Elon Musk is, well, a unique CEO who has been touting Dogecoin for the past week and half in an acid flashback fever dream. But I feel like there is some legs to this and suspect more companies will follow suit.
Today I tweeted that Bitcoin is the new Buyback.
While a bit tongue-in-cheek, I could actually see this playing out. Company shares are at elevated levels, the Biden admin and Fed are deadset on running the economy hot and injecting dollars into the system, and since any equity is valued as a stream of future cash flows, companies may be looking at where they see value in their cash. While it's certainly true that more cash flowing into the economy equals more potential future cash flow for most companies (perhaps a reason for elevated valuations), it may become trendy for CFO's to put a little bit of their cash into something that feels like an inflation hedge and is sexy to the general market.
I'm not saying it will happen, or should happen, but that it's not crazy to think it could. And, is it really that much different share buybacks? In one case you are buying your companies future cash flows. In the other case, you are hedging the purchase power of them (with a potential stock bump). Companies couldn't buy Gold, but Crypto is cool.
If you're long $BTC.X you have to love to see this trend. It makes me a bit uneasy to ponder if it were to be taken to its unlikely, logical conclusion. I've been pretty vocal in that I think crypto is interesting, but those cheerleading it haven't really thought or seem to care about what the implications are should they be successful - which should be a lesson of all tech from the last decade or so. What are your externalities?
I tweeted this yesterday:
The idea of a bunch of private companies controlling the global currency regime is straight out of cyberpunk novels. And yet, here we are. A fight hasn't yet broken out yet but I can't help but at least notice the 5'6'' dude in the corner of the bar in a TapOut shirt muttering things into his Monster Energy Drink and Vodka.