Tesla Allows Customers to Purchase Merch with Dogecoin

In this clip from "The 5" on Motley Fool Live, recorded on Jan. 18, Motley Fool contributors Trevor Jennewine, Jamie Louko, and Taylor Carmichael discuss their thoughts on Dogecoin (CRYPTO: DOGE), and what they think the strategy is behind Tesla (NASDAQ: TSLA) making the announcement that customers can purchase merchandise with it.

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Trevor Jennewine: Tesla recently announced that consumers can purchase Tesla merchandise with Dogecoin. If you're not familiar with that cryptocurrency, Dogecoin was created back 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. The cryptocurrency was created as a joke. It doesn't really have any groundbreaking functionality or utility. For years, Dogecoin had its ups and downs. But around the time that GameStop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC) became popular, short squeeze targets, investors started to push Dogecoin on social media. Tesla CEO Elon Musk also mentioned Dogecoin in several tweets. Between the beginning of 2020 and May of 2021, Dogecoin rose 31,000%. It has since fallen sharply even so, if you look back at the beginning of 2021, it's still up 8,000% since the beginning of 2020. It's been a wild ride depending on where you got on that train. Let's talk about cryptocurrency. First, does this move 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 just not when it comes to this stuff. Elon Musk, the guy's a genius, but it just seems weird, to put it nicely, to do things like this. To me, Dogecoin is like GameStop. It's not going to be around in five years. I wouldn't be surprised if it's gone in one year. I don't know. None of this makes sense to me and it hasn't made sense to me since the start of it. Definitely not going to be a needle mover. Although the only thing that I could see reasonably coming out of this is Tesla morphs this into being able to take payments in other cryptocurrencies, more established ones, I'm thinking Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), things like that. But, needle mover? No. Does it make sense? No, not really. But, hey, there's potential.

Jennewine: Taylor, what are your thoughts here?

Taylor Carmichael: You know, it's interesting. The crypto space has made a lot of people really wealthy. Bitcoin and Ethereum in particular have made people very wealthy. Early investors. I think that's why those guys invented it as a joke. It was a joke, a commentary on how crazy the prices in crypto had gotten. The joke was on the inventors because they sold it, took small profits and they missed out on this massive insane run that this joke crypto that does nothing. There's no real investment case for buying Dogecoin and it's one of the worst things you can invest in, in my opinion. Elon Musk tweeted about it a year ago, I think. It might've been 2020 also as a joke. He said some things on Twitter (NYSE: TWTR) that are not serious. He got on board on the party train. I think it was the tweets from Elon Musk that, in general, just sent that particular crypto through the roof. That, and it's easy to buy because it's on the Robinhood (NASDAQ: HOOD) platform. The vast majority 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 tech in order to acquire it. You have to trade for it, you can't buy it with cash. Several crypto, about 100, 120 cryptocurrencies are available on sites like Coinbase (NASDAQ: COIN). Robinhood only has like four or five cryptos, and if you looked at it, you might think Dogecoin was a serious investment and it's not serious investment. I see this move from Tesla as Elon Musk trying to prop up this joke cryptocurrency that he made a joke about a year ago and trying to help them out and keep that price up there. But it's just a disaster waiting to happen. I don't see any bullish case for owning that particular crypto. I think it's a very dangerous investment for anybody.

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

Louko: I think you put it nicely, Taylor, a disaster waiting to happen. I think that sums it up perfectly.

Carmichael: That's the other interesting thing. One of the reasons crypto is like it is very difficult to short cryptocurrencies. You don't have those people coming in shorting, making money that way, which you have in the stock market but is not in the crypto market yet. Maybe one day. If you ever wonder what the market looks like if you took the shorts out, well, it would look like the crypto market. You can have craziness go on. Shorts bring a little bit of sanity to markets, I think. But at a certain point, people will panic, and there will be a lot of panic selling because there's nothing there. There's nothing to own.

Jennewine: 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 as much it is today, a year from now. That's one of the things about those height-fueled cryptocurrency and the space in general. It can be worth five times what it is today, a month from now, or it could be worth that significantly less. As far as being a needle mover for Tesla, I don't think so, absolutely not. I think it's more of a publicity thing. I do believe Elon Musk has said that he owns Dogecoin.

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

Jennewine: I think it's more just a wink at the Dogecoin enthusiasts out there.

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Jamie Louko owns Ethereum and Tesla. Taylor Carmichael owns Coinbase Global, Inc. Trevor Jennewine 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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