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Tesla’s Q4 Earnings: A Story of Two Halves
Tesla’s latest earnings report, released on January 29, was expected to disappoint investors due to slowing auto sales, revenue below expectations, and increasing operating costs. However, an unexpected factor gave Tesla’s financials a sudden boost – its Bitcoin holdings.
Bitcoin: The Savior
Thanks to a newly implemented accounting rule, Tesla’s Bitcoin holdings received a substantial revaluation, adding $600 million to the company’s net income. Previously, accounting standards required companies to report Bitcoin at its lowest value during ownership, regardless of any recovery in price. However, in December, the Financial Accounting Standards Board introduced a new rule allowing digital assets to be valued at market prices each quarter.
The timing couldn’t have been better for Tesla. Bitcoin’s surge in Q4 meant the company could finally reflect the true value of its holdings – just as the asset rallied.
Decoding the Reasons Behind Tesla’s Income Boost
Tesla’s Q4 earnings paint a picture of a company under growing financial strain. Revenue for the quarter came in at $25.71 billion, a modest 2% increase from the previous year but well below analyst expectations of $27.22 billion. Meanwhile, operating expenses surged 9% from the previous quarter to $2.59 billion, further squeezing profitability.
However, the Bitcoin-driven revaluation helped Tesla post a GAAP net income of $2.3 billion, with $600 million of that coming directly from Bitcoin. Investors responded negatively to the announcement, causing Tesla’s stock to drop more than 3% over two days.
The Story Beyond the Facade
At first glance, Tesla’s Q4 earnings seemed decent, with non-GAAP earnings per share of $0.73. However, financial analyst Gordon Johnson pointed out that this figure didn’t tell the full story. A closer look revealed that 17 cents of the reported non-GAAP EPS – or roughly 23% – came from Tesla’s $600 million Bitcoin revaluation gain.
This gain was purely on paper, meaning Tesla didn’t sell its Bitcoin; it simply recorded the increase in value due to Bitcoin’s price rally. Stripping out this adjustment, Tesla’s actual non-GAAP EPS would have been closer to $0.53, which is 27% lower than the reported figure.
Tesla: Automaker, Fintech Player, or Something Else?
Tesla’s Bitcoin-driven earnings boost reflects a broader trend of public companies integrating Bitcoin into their balance sheets. As of January 30, 78 publicly traded companies collectively hold over 3 million BTC, representing approximately 14.3% of Bitcoin’s total 21 million supply.
MicroStrategy remains the largest corporate Bitcoin holder, with 471,101 BTC valued at approximately $49.5 billion. Other major corporate Bitcoin holders include Marathon Digital, with 44,893 BTC worth around $4.7 billion, and Riot Platforms, holding 17,722 BTC valued at nearly $1.9 billion.
As Tesla faces financial pressures, Elon Musk has been expanding his focus on digital finance. His social media platform, X, announced a partnership with Visa to launch a digital wallet and peer-to-peer payment service. The X Money Account will enable users to transfer funds between traditional bank accounts and digital wallets, positioning X as a direct competitor to fintech giants like Zelle and Venmo.
For Tesla, the question remains: what happens when the numbers no longer align with the story? Does Tesla remain an automaker, or is it transforming into something else entirely – a company whose fate is tied not just to production lines but to digital assets, accounting maneuvers, and Musk’s increasingly unpredictable ambitions?
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