Tesla earns profit worth $1B in Bitcoin, Wedbush's Dan Ives says

Tesla scored profits worth $1 billion in Bitcoin. Wedbush Securities Managing Director Dan Ives joins Yahoo Finance Live to weigh in on Tesla’s growth amid pandemic.

Video Transcript

AKIKO FUJITA: Shares of Tesla right now, it is down nearly 5%. Profits from Tesla's Bitcoin investments, though, on track to outpace profits from its electric vehicles. The company's already made roughly a billion dollars on paper. That's at least according to our next guest, Wedbush Securities, Dan Ives managing director there.

Dan, let's start with the case there because the billion dollars in terms of profits on paper, certainly a significant return when you consider the investment was only announced a few weeks ago. And yet you look at the volatility of where Bitcoin is trading today. And that seems to point to sort of the risk that's inherently introduced now because of the significant investment it's made in cryptocurrency. How are you seeing the payoff here between the risk and the volatility and also the profits that come with it?

DAN IVES: Yeah, it's a great question. I mean, look, 1 and 1/2 billion that they've invested, so far about billion in profit. And like I've said, that's more than all they made on EV vehicles in 2020. But that continues to be the double-edged sword. It's going to add risk to the story. And we're seeing that in terms of the volatility. But ultimately, it's the forest for the trees.

In terms of where Tesla and Musk see Bitcoin, it's going to be a part of the Tesla story, not just from an investment perspective, but from a transaction point of view as well. And this, just in my view, is going to continue to be a big part of the story going forward, especially as we go into this golden age of EVs.

ZACK GUZMAN: I mean, my question would be how frustrating that is maybe for an analyst who's believed for a while and has been right on kind of the upside here in Tesla. I mean, I imagine it's got to be a headache for you to now factor in these swings that are stemming from Bitcoin and maybe how it could be, as critics point out, maybe a bit of a distraction in the Tesla story moving forward.

DAN IVES: Yeah, but at this point, it's still contained. 1 and 1/2 billion, I think that's something most investors that I've talked to still view the goal posts there as pretty contained relative to the overall assets. And it's a sideshow because ultimately, the overall story here is the transformational EV story, 5 trillion over the next decade.

And right now, it's Tesla's world. And everyone else is paying rent in terms of EVs. But you see Ford, GM, others that are really going all in on EVs. I think there's going to be a big enough ocean for more than one boat. I think we're just in the early innings of this EV story playing out. And that's why Tesla-- I still think this is a trillion dollar market cap over the coming months.

AKIKO FUJITA: In terms of how you value Tesla though, has that shifted at all? If you look at the $743, roughly, it's trading at right now, is it ultimately on the EVs, on the batteries? How do you factor in the Bitcoin investment in the overall price?

DAN IVES: Yeah, so far, I still view Bitcoin as not being factored into the price. If that starts to be 3 to 4 billion that they invest or more, then that starts to be something more significant that you could factor into the sum of the parts. But right now, we think China alone is worth $100 per share.

And you look at what's happening there, I think Tesla's going to be on track to head toward 800,000 units for the year. And that's really the story here. And I think Bitcoin will start to play more of a role as it becomes more of bigger percentage transactions or from an investment perspective. We still believe, although a ripple effect, less than 5% of public companies will be investing in Bitcoin over the next 12 to 18 months, till, at least, there's more regulatory goal posts put in.

ZACK GUZMAN: Yeah, I mean, is it going to take them upping their investment for it to need to be priced into where it goes? Because even just the size of it, as you rightly point out, was up pretty significantly if you put in 1 and 1/2 billion. It's about 10% or under 10% of their cash or cash equivalents into Bitcoin. I mean, if we continue to see a rally there, it's going to be a larger and larger piece of this company.

DAN IVES: Yeah. And I think that becomes a slippery slope because going back to your other point, you don't want this sideshow to ruin the overall EV party. I mean, in terms of even where it trades today, you'll see stock down with Bitcoin down. But I think that's something-- if it starts to get to 20% of cash, 25%, then I think it starts to become more front and center. But for now, it's really a green field opportunity, especially with a Biden green tidal wave on the horizon and where Tesla's positioned.

I think that's where you're going to see these EV stocks that have taken a bit of a pause and even some of the Chinese players, Nio and others-- but I think over the coming year, these stocks are going to be up significant.

AKIKO FUJITA: Dan, let's shift our attention to Apple. Shares there down about 2 and 1/2 percent in the session right now. But you have said that you believe Apple can hit that $3 trillion market cap by the end of the year. Walk me through your thesis there. How much of this is about the growth and the momentum we've seen in the new iPhone sales? How much of it is about the services sector?

DAN IVES: Yeah. And a big part is the supercycle. It's not just hype in terms of iPhone 12. It's playing out. And we've seen that from our tracks across Asia. And I think more and more, just getting bullish into March and June. And right now, Cupertino is on track to be potentially 240 million, 250 million iPhone units for the year. That will just massively beat the record from 2015.

So I think this is an unprecedented supercycle that plays out. And then it's just a further monetization on the services. Services is key to the rerating. We think services alone is worth 1.2 to 1.3 trillion. That's why I believe, as we go into later this year, we have a $3 trillion market cap with Apple.

And I view this sort of pause that we're seeing in the stock post what we saw in terms of numbers last month, it's just-- I've used a knee-jerk, not going to be sustained. But I still see a green light to own Apple here.

ZACK GUZMAN: Dan, if there is one weak point that we've heard some of the Apple critics highlight is maybe weakness on the Apple TV side relative to what we've seen. And obviously, Apple has a lot going on. But the plus that Disney+ has gotten from investors as they've leaned into streaming, obviously Netflix-- so what's your take on maybe what more can be done to really boost Apple TV now? Or is it just completely, in this grand scope of things, just not important for Apple?

DAN IVES: And it goes back to on streaming, the biggest strategic mistake, in my opinion, from Jobs and Cook over the last 10 to 12 years of not acquiring Netflix a number of years ago. And now you look on streaming, well behind. Look what's happened in the arms race with Disney. The only way that Apple becomes a legit player is if they buy a studio.

We've talked about an MGM, a Lionsgate, an A24. Otherwise, they're going to continue to sort of be on the outside, looking in. And that's why I think this is something they're going to be more and more forced into doing M&A because it's all about content. And right now, they've had great content. But they have a mansion with little furniture. And that's the problem when it comes to this arms race we're seeing, especially with Disney. And of course, Netflix top of the heap.

ZACK GUZMAN: Yeah, not a lot of wrongs to right there. But maybe that one, as you rightly point out, one that they've been slow to kind of jump on. But Dan Ives, Wedbush Securities managing director, always love having you on. Thanks again for joining us.