No fewer than 47 companies mentioned the term “inflation” in their earnings reports for the first quarter of 2021.
According to a report by financial market data provider FactSet on Monday, the number represents the largest number of companies to have done so in the past decade.
In early April, the US Bureau of Labor Statistics published its Producer Price Index report, which shows the PPI rose 4.2% year over year, the highest since September 2011.
While the chairman of the Federal Reserve, Jerome Powell goes on to argue that the current inflation and consumer price index numbers are temporary. There is a counter-argument that companies will shift the burden of higher production costs on to their consumers.
In the meantime, companies may also be looking for ways to protect their cash reserves from the devaluation of the US dollar after nearly $ 6 trillion in stimulus money poured into the US economy in the wake of the ongoing coronavirus pandemic.
In August 2020 MicroStrategy business intelligence team made headlines when it announced the first purchase of Bitcoin (BTC). Michael Saylor’s company now has more than 90,000 BTC, valued at more than $ 5 billion, and the asset has increased nearly fivefold since August 2020.
On Monday, Tesla announced in the company’s financial report for the first quarter that it would sell $ 272 million worth of Bitcoin, representing approximately 10% of its BTC stakes.. According to Tesla’s profit call for the first quarter of 2021, the electric vehicle maker generated net proceeds of $ 101 million from the sale.
Tesla first announced its BTC stakes in February and announced it had purchased approximately $ 1.5 billion worth of Bitcoin.
Given that inflation is likely to continue its upward trend, at least in the short term, more US companies could convert some of their cash reserves into bitcoin. This probability is despite the arguments against the Treasury experts in February.
In March, Dawn Fitzpatrick, chief investment officer at Soros Fund Management, stated that due to the depreciation of the US dollar, BTC was no longer a marginal asset.