Tesla allows customers to buy goods with Dogecoin

In this clip of “The 5” on Motley Fool Live, recorded on January 18Motley Fool contributors Trevor Jennenewine, Jamie Louko and Taylor Carmichael discuss their thoughts on Dogecoin (CRYPT: DOGE)and what they think the strategy is behind You’re here (NASDAQ: TSLA) by advertising that customers can buy goods with.

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Trevor Jennewin: Tesla recently announced that consumers can purchase Tesla products with Dogecoin. If you are not familiar with this cryptocurrency, Dogecoin was created in 2013 by Adobe (NASDAQ: ADBE) Engineer Jackson Palmer and IBM (NYSE: IBM) Engineer Billy Marcus. The token’s mascot is a Shiba Inu which is a breed of hunting dog in Japan, and it was taken from a popular meme at the time. Cryptocurrency was created as a joke. It doesn’t really have any breakthrough functionality or utility. For years, Dogecoin has had its ups and downs. But around the time GameStop (NYSE: GME) and CMA Entertainment fund (NYSE: AMC) became popular targets and in the short term, investors started pushing Dogecoin on social media. Tesla CEO Elon Musk also mentioned Dogecoin in several tweets. Between early 2020 and May 2021, Dogecoin grew by 31,000%. It’s fallen sharply since, although if you look back to the start of 2021 it’s still up 8000% since the start of 2020. It’s been a wild ride depending on where you rode in that train. Let’s talk about cryptocurrency. First, does this decision make sense for Tesla? Is it a needle mover for the company? Jamie, let’s get your thoughts here.

Jamie Louko: I really like Tesla and Elon, but not when it comes to that stuff. Elon Musk, the guy is a genius, but it just seems weird, to put it mildly, to do stuff like that. For me, Dogecoin is like GameStop. He won’t be here in five years. I wouldn’t be surprised if he disappeared in a year. I do not know. None of this makes sense to me and it didn’t make sense to me from the start. It will definitely not be a needle remover. Although the only thing I can reasonably see coming out of this is that Tesla transforms this into being able to accept payments in other cryptocurrencies, more established ones I think Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO:ETH), things like that. But, needle mover? No. Does that make any sense ? Not really. But hey, there is potential.

Jennewin: Taylor, what do you think?

Taylor Carmichael: You know, it’s interesting. The crypto space has made a lot of people very rich. Bitcoin and Ethereum in particular have made people very rich. Early Investors. I think that’s why those guys made it up as a joke. It was a joke, a commentary on the price madness in crypto. The joke was on the inventors because they sold it, took small profits, and they missed this massive mad rush that this crypto joke does nothing. There is no real investment case for buying Dogecoin and it is one of the worst things you can invest in, in my opinion. Elon Musk tweeted about this a year ago I think. Maybe it was 2020 as a joke too. He said things about Twitter (NYSE: TWTR) it does not matter. He boarded the party train. I think it was Elon Musk’s tweets that usually just sent that particular crypto through the roof. That, and it’s easy to buy because it’s on the Robin Hood (NASDAQ: HOOD) Platform. The vast majority of cryptocurrencies are not easy to buy. You have to get a trading account and you have to get a wallet and you have to learn the technology in order to acquire it. You have to trade it, you can’t buy it with money. Several crypto, about 100, 120 cryptocurrencies are available on sites like Coinbase (NASDAQ: CURRENCY). Robinhood only has four or five cryptos, and if you look at it, you might think that Dogecoin was a serious investment and it’s not a serious investment. I see this Tesla move as Elon Musk tries to back up this cryptocurrency prank he made about a year ago and tries to help them and keep that price there. But that’s just impending doom. I see no bullish case for owning this particular crypto. I think it’s a very dangerous investment for anyone.

Trevor Jennewin: I agree with both of you. Go ahead, Jamie.

Louco: I think you said it right, Taylor, impending disaster. I think that sums it up perfectly.

Carmichael: That’s the other interesting thing. One of the reasons for crypto is that it is very difficult to short cryptocurrencies. You don’t have these people coming in and shorting, making money that way, what you have in the stock market but not in the crypto market yet. Maybe one day. If you’re wondering what the market looks like if you take the shorts off, well, it would look like the crypto market. You can have the madness continue. Shorts bring a bit of savvy to the markets, I think. But at some point, people are going to panic, and there’s going to be a lot of panic selling because there’s nothing there. There is nothing to own.

Jennewin: I tend to agree with what you said about Dogecoin. I don’t think there’s a clear investment thesis there. That being said, it could be worth five times what it is worth today, a year from now. This is one of the things about these high-powered cryptocurrencies and space in general. It may be worth five times what it is worth today, in a month, or it could be worth much less. As for moving needles for Tesla, I don’t think so, absolutely not. I think it’s more a question of publicity. I believe Elon Musk said he owned Dogecoin.

Carmichael: He bought it for his daughter, I think.

Jennewin: I think this is more than a nod to Dogecoin enthusiasts.

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Jamie Louko owns Ethereum and Tesla. Taylor Carmichael owns Coinbase Global, Inc. Trevor Jennewin owns Adobe Inc. and Tesla. The Motley Fool owns and recommends Bitcoin, Coinbase Global, Inc., Ethereum, Tesla, and Twitter. The Motley Fool recommends Adobe Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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