26 Jan 2023
In January 2023, Tesla earned $70 million from its Bitcoin holdings, representing approximately 2.3% of its total profits
Exploring the Company’s Commitment to BTC, Accounting Rules for Digital Assets, and the Significance of a Well-Timed Strategy
Tesla, the American electric car manufacturer, recently released its Q4 2022 earnings report, which revealed that the company’s Bitcoin (BTC) holdings remained unchanged from the previous quarter, valued at $1.26 billion. Despite the relatively stable price of BTC during the period, the company did not buy or sell cryptocurrency, and no impairments were recorded in the value of its BTC holdings.
In February 2021, Tesla announced its purchase of $1.5 billion BTC. The move was a bold step for the crypto market and a potential game-changer. However, later in Q1, the company reduced its BTC position by 10%, a sale that boosted that quarter’s earnings by $272 million. The company did not engage in any buying or selling of BTC in Q2 2022. In Q3 2022, Tesla was required to report a $51 million impairment to reflect the decline in the price of the cryptocurrency. This is in line with accounting rules for digital assets, which state that if the price of an asset falls during a quarter, a company must report an impairment, but if the price increases, it is not reported as a gain on the balance sheet.
According to FactSet, Tesla’s adjusted Q4 earnings per share came in at $2.54, higher than the $2.36 expected by analysts. In addition, revenue came in at $17.7 billion, higher than the expected $17.1 billion. Tesla’s share price initially fell about 4% after the earnings release but recovered, with shares currently slightly up to $939.51.
The company’s subsequent decision to sell a significant portion of its BTC holdings in July 2022, when the crypto market was in a bearish trend, raises questions about its long-term commitment to the asset class. Additionally, the company’s plan to accept Bitcoin as a form of payment was also put on hold, further fueling speculation about the company’s true intentions toward the cryptocurrency.
However, it’s important to note that in January 2023, Tesla earned $70 million from its remaining Bitcoin holdings, representing approximately 2.3% of its total profits. This highlights the potential profitability of cryptocurrency investments and the significance of a well-timed strategy. While this information should not be taken as a guarantee of profit or a recommendation to invest in cryptocurrency, it serves as valuable insight for investors looking to evaluate the potential of different assets.
To summarize, while Tesla’s earnings report shows that the company has not made any significant changes to its BTC holdings, its previous actions and decisions regarding the cryptocurrency raise essential questions about its commitment to the asset class. Furthermore, investors need to be aware of accounting rules for digital assets and how they may impact a company’s financial reporting.
The information that Tesla earned $70 million in profits from Bitcoin in January, which represents 2.3% of the company’s total earnings for the year, provides valuable insights into the potential profitability of cryptocurrency investments and the importance of a well-timed strategy.
Shares rose more than 5% after hours after CEO Elon Musk said the company might be able to produce 2 million cars in 2023. Here are the results:
- Earnings (adjusted): $1.19 vs. $1.13 per share expected, per Refinitiv
- Revenue: $24.32 billion vs. $24.16 billion expected, per Refinitiv
In the year-ago quarter, Tesla reported revenue of $17.72 billion and adjusted earnings of $2.52 per share ($0.85 adjusted for August 2022 stock split).
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