Electric vehicle maker Tesla has recently sold part of its Bitcoin holdings. This according to its latest quarterly earnings report. Reportedly, Tesla made a $272 million profit from the sale of its digital assets. Only a small 10% share of its total Bitcoin holdings was sold.
In a 30-pager accompanying its quarterly financial results, Tesla pointed to a $101 million “positive impact” as a result of its Bitcoin sale:
“Year over year, positive impacts from volume growth, regulatory credit revenue growth, gross margin improvement driven by further product cost reductions and sale of Bitcoin ($101M positive impact, net of related impairments, in Restructuring & Other line), were mainly offset by a lower ASP, increased SBC, additional supply chain costs, R&D investments and other items. Model S and Model X changeover costs negatively impacted both gross profit as well as R&D expenses.”
Tesla remains bullish
While many mainstream investors are not surprised by the company’s move to sell its bitcoin at a profit, the 10% that was sold is by no means a loss of faith in the top cryptocurrency. In March Tesla has started accepting Bitcoin as payment for its cars without converting it into fiat currency.
Considering that 90% of its initial $1.5 billion purchase still remaining on its balance sheet, CEO Elon Musk responded on Twitter with a clarification.
According to the ‘Technoking of Tesla’, the sale was done to prove the asset’s liquidity and viability as an alternative to cash on its balance sheet.
No, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.
— Elon Musk (@elonmusk) April 26, 2021
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Nonetheless, there is skepticism about the move as it shows how easily a company that has Bitcoin on its balance can “tweek” its company’s performance by selling the cryptocurrency.
So will Tesla re-purchase the bitcoins?
— Spencer Schiff (@SpencerKSchiff) April 27, 2021
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While noting that it is expecting vehicle delivery growth to exceed 50% this year, the company announced good Q1 numbers. It reports net income of $438 million in the first quarter, a new all-time high. On a revenue of $10.39 billion, per-share earnings were 93 cents.
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Source: Igaming
