Square (SQ) hit an all-time high on Monday after electric car maker Tesla’s (TSLA) purchased $1.5 billion in cryptocurrency Bitcoin, of which Square has an interest. The move drove up both Square stock and Tesla stock.
Tesla’s move also sent Bitcoin’s price to an all-time high above 44,000. In a regulatory filing, Tesla said it also plans to start accepting payments in Bitcoin for its electric cars.
Tesla purchased $1.5 billion in Bitcoin in January, the filing said. Tesla founder Elon Musk has touted digital currencies on his social media platforms.
In October, Square announced it purchased $50 million in Bitcoin. Also, users of the consumer Square Cash App are able to buy, hold and sell the digital cryptocurrency.
Square stock jumped 8.5% to 260.78 in midday trading on the stock market today. It reached 264.27 at one point Monday. Tesla stock rose 2% to near 869.
Bitcoin transactions have sent Square’s revenue soaring. However, Square’s bitcoin business has gross profit margins of only around 2%, analysts say.
In the September quarter, Cash App generated $1.63 billion of bitcoin revenue and $32 million of bitcoin gross profit, up approximately 11 times and 15 times year over year.
Square stock surged in 2020 as investors focused on the growth of its consumer-facing Cash App. They shrugged off worries over Square stock exposure to small businesses and restaurants that might close because of the coronavirus pandemic.
Further, Square stock is extended above a 87.35 entry point. Square stock has yet to form a new base, giving investors an opportunity to take a position.