The Motley Fool

Tesla vs. Bitcoin: How Have They Performed Since 2010?

Image source: Getty Images

When it comes to generating exponential returns, few have managed to beat Tesla (NASDAQ:TSLA) or Bitcoin. While the former has disrupted the automobile space, the latter is looking to replace fiat currencies all around the world.

Tesla stock was trading at US$3.84 back in July 2010 and is currently priced at US$700. This means it has returned 18,100% in just over a decade. So, a $1,000 investment in Tesla stock soon after its IPO would have ballooned to $182,000 today.

If you think these returns are staggering, wait until you compare them with Bitcoin. The world’s most popular digital currency was trading at US$0.08. Today, it has jumped to US$50,000 per coin, increasing 625,000 times in this period. A $1,000 investment in Bitcoin back in 2010 would have been worth an earth-shattering $625 million today.

However, past returns don’t matter much to future investors. We need to analyze if these assets can continue to crush the broader market going forward.

The case for Bitcoin

Bitcoin is currently trading at a market cap of US$975 billion, which means it is valued higher than Facebook and even Tesla. While the cryptocurrency space has come under fire from several financial stalwarts, including Warren Buffett, it has also experienced widespread adoption and institutional interest in the last year.

Industry experts believe Bitcoin to be a hedge against inflation and is similar to gold. However, it might store value more effectively than gold over the long term. In case the price of Bitcoin stabilizes in the upcoming decade, it can very well become a medium of transaction.

According to a report from bitcointreasuries.org, about 38 companies have invested US$66.5 billion in Bitcoin, and this figure is expected to move higher. These organizations include Tesla, MicroStrategy, and Square.

Digital payments platform PayPal is also supporting cryptocurrencies, while Skrill, which is owned by PaySafe, has extended its crypto offering by allowing people to onboard themselves via the Skrill wallet.

Another report from Cointelegraph states the total estimated crypto users worldwide rose to 106 million in January, up from just 73 million in June 2020.

The case for Tesla

Tesla is a market leader in the electric vehicle space and shipped close to 500,000 automobiles in 2020. It has reported profits in each of the last six quarters and is now the most valuable automotive company in the world.

Tesla has a huge market opportunity ahead given the global shift towards clean energy. While the EV space might get heated and attract competition, Tesla’s leadership position combined with a visionary CEO in Elon Musk and rising profit margins make it a top stock to buy right now.

Tesla stock is trading at a market cap of US$700 billion. It has lost momentum in the recent past and is trading 23% below its record high. The recent pullback provides investors an opportunity to buy a quality growth stock at a lower multiple.

The Foolish takeaway

While Tesla and Bitcoin have been solid wealth creators in the past decade, the latter’s volatility and the lack of regulation make it a riskier bet. However, with high risk comes high rewards.

Are you a fan of growth stocks?

Looking for the Next Potential Netflix? We’ve Got You Covered with These 3 Free Stock Picks

Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.

Click Here to Get Your Free Report Today!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Facebook and Tesla. Tom Gardner owns shares of Facebook, Square, and Tesla. The Motley Fool owns shares of and recommends Facebook, PayPal Holdings, Square, and Tesla and recommends the following options: long January 2022 $75 calls on PayPal Holdings. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.