Tesla $1.5bn Bitcoin purchase triggers new record high – as it happened
Tesla $1.5bn bitcoin purchase triggers new record high – as it happened
Key events8 Feb 2021Closing summary: Musk's Tesla puts rocket under bitcoin8 Feb 2021US stock markets hit record high8 Feb 2021Bitcoin price surges after Tesla purchase disclosure8 Feb 2021Tesla discloses $1.5bn bitcoin purchase8 Feb 2021Global shares push to latest record high8 Feb 2021Shares in Boohoo and Asos fall after online sales tax reports8 Feb 2021Boohoo buys Dorothy Perkins, Wallis and Burton brands8 Feb 2021Oil prices hit $60 per barrel for first time since February 2020Show key events onlyPlease turn on JavaScript to use this featureClosing summary: Musk's Tesla puts rocket under bitcoinElon Musk knows how to create a stir: the disclosure on Monday that his company, Tesla, has bought bitcoin worth $1.5bn (£1.1bn) pushed the price of the cryptocurrency up to a new record high of $44,868.98.Tesla shares gained 2.3% in early trading in Monday - raising its value by more than $18bn - more than offsetting the price of the bitcoin purchase.Musk’s ownership of SpaceX, the rocket company, is making it easy fodder for memes from grateful bitcoin investors.$TSLA adds $1.5 billion #Bitcoin to its balance sheet. Buckle up, we're passing the Moon and heading to Mars! 🚀— Tyler Winklevoss (@tyler) February 8, 2021
Even if it does turn out to be a “bubble investing in a bubble”, Tesla shares and bitcoin are not the only prices that have the proverbial rocket under them, as hopes rise that the White House can pass a major stimulus bill.Here are some of the other main business stories from throughout the day:
 The main US stock market indices hit new record highs, as did the global stock market index.
 Brent crude oil futures prices rose as high as $60.27, the highest since the extent of the coronavirus pandemic became clear.
 Mike Ashley’s Frasers Group sold his shares in French Connection.
 Boohoo bought Dorothy Perkins, Wallis and Burton for £25m, but most of the jobs in stores will likely be lost.
You can continue to follow our live coverage of news on the pandemic and more from around the world:In the UK, 10 Downing St has admitted that hotel contracts for quarantine scheme launching next week have not yet been signedIn the US, it is the final day of preparations in the Trump impeachment as Senate trial looms And in our global coverage, Argentina finds first cases of Brazilian variants; France bans homemade masks in schools Thanks for following our live coverage of business, economics and financial markets today. Please do join us again tomorrow. JJUS stock markets hit record highThe S&P 500, Dow Jones industrial average and Nasdaq have all hit new record highs on Monday, reflecting the general risk-on attitude as investors look ahead to the US stimulus bill.Here are the snaps:
 S&P 500 UP 17.33 POINTS, OR 0.45%, AT 3,904.16 AFTER MARKET OPEN 
 DOW JONES UP 118.88 POINTS, OR 0.38%, AT 31,267.12 AFTER MARKET OPEN
 NASDAQ UP 78.89 POINTS, OR 0.57%, AT 13,935.19 AFTER MARKET OPEN
You can forget sometimes that Tesla was facing serious cash flow problems less than two years ago, but it managed to walk the tight rope through production problems.During 2020 it was gripped by an investor mania that has pushed its value to more than $800bn - bigger than the next nine carmakers combined (when we ran the numbers last week). That share price increase allowed it to raise billions of dollars by issuing new stock to be snapped up by retail investors.Tesla trades at an astonishing price to earnings ratio of more than 1,300, suggesting that it either has to grow sales by an order of magnitude or expand its business model.“Tesla is a bubble investing in another bubble,” said Glen Goodman, an author of a book on cryptocurrency trading. Tesla is unlikely to invest much more of its cash reserves in bitcoin because of its volatility, he added.
 As a bitcoin and crypto investor, I’m happy obviously but - as in 2017 - at some point I will have to get out as another almighty crash begins.
Tesla’s bitcoin purchase has sent the cryptocurrency world into ecstasies.I just noticed you can buy a Tesla with less than 1 bitcoin.— Cryptoyieldinfo (@Cryptoyieldinfo) February 8, 2021
Perspective on Tesla buying $1.5 billion in #Bitcoin▶️ ~0.18% of its current market cap▶️ ~7.7% of its year-end cash$1.5 billion sounds like a lot of money, but it's a small bet$TSLA market cap currently up ~$20 billion pre-market on the news— Brian Feroldi (@BrianFeroldi) February 8, 2021
Tesla’s regulatory disclosure points out even more problems for the company: it could depress the company’s profits. Every time the value of bitcoin falls the company will have to make a provision in its financial results, but it won’t be able to book any profits until it actually sells it, under accounting rules.There are also risks of “security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets”.Just ask the guy who ended up searching a dump for an old hard drive with his old bitcoin wallet.On it goes: bitcoin is now up 17% through the $44,000 mark and hitting $44,868.98.That is a new record. Tesla’s purchase is generating fortunes across the world.The Tesla bitcoin purchase really raises a whole host of questions, but here are two of the most pressing: will Tesla’s investors appreciate their stock being exposed to the wild movement of bitcoin? Can Elon Musk legally tweet bitcoin memes when pumping the price will increase the value of the company he runs?Musk recently replaced his Twitter biography with “#bitcoin”, but had not previously revealed any holdings.For some large institutions the bitcoin holding could cause significant problems: volatility in the cryptocurrency’s price could depress fund managers’ returns.Neil Wilson, chief market analyst for Markets.com, an online trading website, said: 
 It raises a real question about possible market manipulation. Musk’s tweeting record is chequered to say the least and he has had his knuckles rapped by the SEC in the past. The filing simply says that the investment policy was updated in January 2021 and ‘thereafter’ the company invested an aggregate $1.5bn in Bitcoin. Timing would appear critical.
 Tesla also says it may acquire and hold other digital assets. The move will also raise questions for fund managers who may not want to invest in a company with this kind of risk on its balance sheet – we know bitcoin is very volatile – this is normal FX risk x100. Tesla is now starting to take on big FX risk – this may not worry a lot of investors, but some conservative types might be concerned. 
Expect this story to run and run.Bitcoin price surges after Tesla purchase disclosureThe price of bitcoin has gained 13% to reach a new record high of $43,774 after Tesla’s disclosure that it has bought $1.5bn of the cryptocurrency.With a holding of that size the disclosure alone will already have made Tesla a large paper profit - although the carmaker did not disclose how much it paid for the cryptocurrency.Here is the price action today:The price of bitcoin surged after Tesla disclosed its $1.5bn holdings. Photograph: RefinitivTesla discloses $1.5bn bitcoin purchaseTesla chief executive Elon Musk looks at his mobile phone in January. Photograph: Joe Skipper/ReutersTesla, the US electric carmaker run by the multibillionaire Elon Musk, has revealed that it has bought bitcoin worth $1.5bn.The carmaker also plans to accept bitcoin as payment for its cars, the company revealed in a regulatory filing published on Monday.Musk has in recent weeks expressed increased interest in bitcoin. Last week the price of bitcoin rose after Musk labelled it a “good thing”; given Tesla’s now-disclosed large purchases of bitcoin, the price rise is likely to have directly benefited the comany.Tesla said the move would “provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity”.Tesla revealed the purchases in its risk disclosures section, which detailed a host of potential pitfalls for holders of the cryptocurrency. It said:
 We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt. 
 The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.
Sarah ButlerMike Ashley is the chief executive of Frasers Group, the owner of Sports Direct. Photograph: Kirsty O’Connor/PAMike Ashley’s Frasers Group has offloaded its 25% stake in French Connection after the fashion retailer’s share price shot up on hopes of a bid.Frasers sold its 24.1m shares for up to £3.8m on Thursday 4 February when French Connection’s shares surged by more than a third at one point.The unusual stock movement forced the company to announce it had received offers from two interested party on the Friday. Shares in the company then surged by another 90% that day so that Frasers missed out on about £3.4m in additional gains.French Connection shares have surged this month after reports of a possible takeover bid. Photograph: RefinitivJohn Stevenson, an analyst at Peel Hunt, said that French Connection was another example of where Ashley’s stock market investments had “not gone brilliantly” with the fashion group’s share price now lower than it was five years ago when he first built up the stake. Global shares push to latest record highWorldwide share prices have hit a new record high amid hopes that the expected US stimulus package will lift global demand.MSCI’s all-country world index hit the new record mark after strong gains in Japan and China, followed by stock markets in Europe.The FTSE 100 accelerated before midday in London to a 1.1% gain.“A generalised risk-on tone is pushing stocks higher,” UniCredit’s analysts said in a note, cited by Reuters.Toby Sturgeon, global head of fiduciary investment services at Zedra, an investment services company, said:
 There are clearly risks, such as a resurgent virus and overly bullish sentiment but household finances are in good shape – monetary and fiscal injections have left households with money to spend on eating out, travel and holidays once restrictions are removed. Government spending is expected to remain at high levels and it is being bought up by central banks.
 All signs indicate that low interest rates will continue and we are likely to see a strong recovery in corporate earnings in 2021 and further into 2022, this will likely entice investors into risk assets.
The number of shoppers visiting UK retailers rose by 7% last week compared to the week before, the third week of rising footfall in a row, despite the continuing national lockdown.The rising footfall may indicate “lockdown fatigue”, according to Springboard, which compiled the data - although it acknowledged that the rollout of coronavirus vaccines may also have contributed to increased consumer confidence.Footfall is still two-thirds lower than it was at the same time last year - hardly a surprise when non-essential shops are closed - but the gap with previous sales levels is narrowing.Footfall rose by a sixth week-on-week in the West Midlands, and by about 10% in London and the South West.Diane Wehrle, insights director at Springboard, said:
 Whilst large city centres have taken the biggest hit, footfall still rose in marginally regional cities and by double digits in Central London. With shopper activity increasing for the past three weeks despite all but essential stores remaining closed, the results are delivering ever more compelling evidence of escalating lockdown fatigue.
 The UK’s accelerated vaccination drive could well be driving additional consumer confidence, however, we must remember that it is still only the elderly and vulnerable who have had their vaccinations, and they are typically the least likely to be making trips.
Shares in Boohoo and Asos fall after online sales tax reportsA woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo. Photograph: Dado Ruvić/ReutersThere are some interesting moves on London’s junior stock exchange: the share prices of Boohoo and Asos, two big fashion retailers, have fallen after the UK government said it might target tax rises at tech companies and retailers who have profited from the pandemic.Boohoo shares fell by 4.7% on Monday morning, while Asos shares lost 2.7%.Chancellor Rishi Sunak has opened discussions around an online sales tax with companies as well as looking at options for a one-off “excessive profits tax”. The taxes would try to target those companies that have benefited from the pandemic-induced shift to online shopping.Both Boohoo (the new owner of Dorothy Perkins and other brands from Sir Philip Green’s broken-up empire) and Asos (which picked up Topshop and Miss Selfridge) rank among Britain’s biggest companies - both were valued at more than £4bn on Friday.Boohoo sales rose by 40% in the run-up to Christmas, as its generally younger customers ignored a scandal about conditions in its factories in Leicester.However, neither company is listed on the FTSE 100 or 250 because they have remained on the Alternative Investment Market, Aim, where disclosure requirements are more limited.