Cryptocurrency is having its moment in the sun and whilst a large proportion of people believe this is the time to invest in the notoriously volatile currency, there are others who perhaps feel a little skeptical that this is no more than just a current fad.
For those feeling a little skeptical, but also suffering from FOMO on any potential gains from the growing Bitcoin (CRYPTO: BTC) trend, these three stocks will give you a more hands-off investment in the crypto space.
Square (NYSE: SQ), currently has around 5% of its cash and cash equivalents invested as Bitcoin. Overall in the last 6 months, Square has spent $220 million on Bitcoin purchases. Some would say this is a necessary move as some 3 million users traded Bitcoin on Square’s Cash App during 2020, whilst this year a further 1 million traded the currency in January alone.
The company has other positives too. It started out as a range of services for merchants, with both hardware and software to help process transactions, control payroll, and assist with business banking — great for small and mid-sized businesses. Recently its Cash App, which targets peer-to-peer transactions exploded in popularity during the pandemic as a contact-free way to pay for things. It also became a popular way to receive stimulus checks for those who do not have a bank account.
For an investor who is interested in cryptocurrency, but doesn’t want to go the whole hog, Square is a perfect choice. This company is all about money and Bitcoin forms a natural extension of the business. One thing an investor should be aware of though is that since its most recent acquisition of 3,318 Bitcoins in February, Square stock price is now, more than ever, directly tied to Bitcoins performance, be it good, or bad.
If you think it is a bit strange for Tesla (NASDAQ: TSLA), an electric car-maker, to be investing in Bitcoin, then you would be right. However, Tesla has a policy that allows the company to invest in “alternative reserve assets,” including gold ETFs and gold bouillon, along with cryptocurrency. In addition to this, Tesla intends to begin accepting Bitcoin as a form of payment for its cars.
Tesla’s $1.5 billion Bitcoin bet is a sideshow for the electric vehicle company, yet with this ‘side money’ it has managed to more than double its 2020 profits, which were made from selling cars as well as regulatory credits. Within a few weeks of its Bitcoin investment, the company went from $721 million to $1.72 billion in profit.
Tesla stock had an explosive 2020, similar to the cryptocurrency, and many Tesla investors are crypto-bulls as well, thus, if Bitcoin experiences any volatility, Tesla investors will still remain steady and bullish on this company.
In October 2020, PayPal (NASDAQ: PYPL) announced that it was going to allow U.S customers the option to use cryptocurrency as a method of paying for things on their Cash or Cash Plus accounts. This move is a step further than PayPal’s competitor Square has taken as it opens up the possibility for cryptocurrency to become an everyday commodity, much like cash has been up until this point. By November, PayPal had announced that users can trade cryptocurrency as part of its service. Investors can choose from Bitcoin, Ethereum, Litecoin, and Bitcoin Cash1.
PayPal is a stellar business, its Venmo app is in direct competition with Square’s Cash App, whilst the two grow the number of user accounts and increase customer engagement. Indeed, PayPal has come a long way from being the preferred method of payment for eBay users, it has now diversified and broadened its market reach.
Additionally, it has great revenue growth for a large-cap stock, growing from less than $10 billion annually in 2015 to $21 billion in 2020. Over the next 5 years, the expectation is for it to exceed $50 billion; this will show that as a company it is more than able to handle the demands of the crypto market.
PayPal is the perfect, safe bet for any investor interested in Bitcoin, but is not sure that it is worth experiencing the notorious volatility of the cryptocurrency market. If cryptocurrency really is on the precipice of becoming an everyday commodity, then PayPal is the best place to put your money as it already has that eventuality established as a viable payment method.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Financial Writer at MyWallSt
Poppy’s favorite stock is Nvidia as she loves innovation and this stock has bags of it. Nvidia invented the GPU in 1999 and even today its immersive graphics give life to the gaming world. Poppy is also inspired by Nvidia’s ability to imagine and create positive change for the world, with its AI technology fuelling new developments in the automotive industry, the medical industry, as well as powering data centers around the world.