By
Bena Ilyas
May 9th, 2024
Tesla’s Q2 2023 earnings release has showcased the company’s ability to outperform market expectations.
Electric vehicle pioneer Tesla Inc (NASDAQ: TSLA) has revealed in its Q2 2023 earnings report that it refrained from buying or selling any Bitcoin (BTC) during the quarter. This marks the fourth consecutive quarter in which the company has maintained its current Bitcoin holdings, signaling a commitment to a more long-term embrace of the premier digital currency.
Tesla Inc’s Initial Bitcoin Investment and Q2 Holdings
Tesla made waves in February 2021 when it revealed that it has invested $1.5 billion in Bitcoin. The announcement was historic, driving Bitcoin’s value to new heights and signifying crypto acceptance in the corporate sector.
Tesla’s CEO Elon Musk, known for his unpredictable Twitter activity, fueled the flames by promoting Bitcoin and claiming that Tesla would soon accept the digital currency as payment for its electric automobiles at the time.
By the second quarter of 2023, Tesla’s stance on Bitcoin had taken a significant turn. The company revealed that it had sold more than 30,000 Bitcoins during last year’s Q2, representing approximately 75% of its holdings. The sale amounted to $936 million, leading many to speculate on the reasons behind the disposal.
Tesla’s digital assets have held steady at a net value of $184 million at the end of the second quarter. This is despite the fact that Bitcoin prices rose during the same period, rising from around $28,500 at the end of the first quarter to around $30,400 at the end of the second quarter.
The increase in Bitcoin’s price from the first quarter to the second quarter of 2023 would typically have resulted in a paper gain for Tesla’s digital asset holdings. However, accounting rules in the current regulatory framework do not allow companies like Tesla to recognize such unrealized gains unless they dispose of their digital assets through a sale.
The conservative accounting approach mandates that companies must reflect a decrease in the value of their digital assets when prices decline, even if no sale has taken place. This practice aims to provide a more accurate representation of the company’s financial position, as it considers the current market value of the assets.
However, it also means that companies may not immediately benefit from the appreciation of the value of their digital assets until they decide to sell them.
Tesla Keeps Beating Expectations
Tesla’s Q2 2023 earnings release has showcased the company’s ability to outperform market expectations. The electric car manufacturer reported adjusted earnings per share of $0.91, surpassing the consensus analyst estimate of $0.80, according to FactSet.
Additionally, the company’s revenue for the quarter reached an impressive $24.9 billion, beating analyst estimates of $24.2 billion. The remarkable results have driven Tesla’s shares following the release but the prices have dropped overnight by 3.44% in pre-market and it is trading at $281.25. This, however, does not negate the impressive year the company’s stock has had thus far in which it has risen over 136%.