Tesla records $ 23 million in Bitcoin-related impairment in the second quarter

Tesla Store in Beijing, China, July 4, 2021.

Costfoto | Barcroft Media | Getty Images

Tesla said Monday that a $ 23 million Bitcoin-related impairment caused some resistance to quarterly operating profit.

The electric car company mentioned Bitcoin or crypto only once in its second-quarter announcement after CEO Elon Musk went back and forth about whether Tesla would accept Bitcoin for vehicle purchases.

In February, Tesla announced the purchase of $ 1.5 billion in Bitcoin, which exceeds its total quarterly R & D budget, and said it could continue to invest in cryptocurrencies. As of the end of March, the company said it had an investment of $ 2.48 billion, based on the Bitcoin surge in the first quarter.

Tesla reported a net profit of $ 101 million from Bitcoin sales in the first quarter, pushing net profit to a record high. The company’s financial statements show that profits are reflected in a reduction in operating expenses, suggesting that some of its holdings have reversed as Bitcoin prices rose in the quarter.

However, as Bitcoin prices plummeted by more than 40% in the second quarter, Tesla’s holdings Much less valuable than at the end of the first quarter. NS Cryptocurrencies peaked above $ 63,000 in April and fell below $ 30,000 earlier this month. Bitcoin is currently trading in a shy $ 40,000.

Tesla does not consider Bitcoin as a market value asset. In other words, you only recognize the profit of the profit if you sell it to fix the profit. Therefore, unless Tesla sells its holdings, the decline in Bitcoin’s value will not affect its earnings.

This is a different investment reporting method than companies that support technology start-ups through the venture sector. In such cases, companies typically mark their holdings quarterly based on market prices and then value them by subsequent rounds of funding or public stock prices.

Despite the cost of Bitcoin, Tesla’s operating profit quadrupled year-on-year to $ 1.3 billion. According to Refinitiv, revenue was $ 11.96 billion and earnings per share was $ 1.45, which exceeded analysts’ estimates.

Tesla’s share price rose 1.4% to $ 666.59 in after-hours trading on Monday. Stocks, one of the best market performers in recent years, have fallen by more than 25% since January.

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Tesla records $ 23 million in Bitcoin-related impairment in the second quarter

Source link Tesla records $ 23 million in Bitcoin-related impairment in the second quarter

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