The value of the electric automakers’ sizable bitcoin holdings fell significantly in the second quarter.Read MoreFeedzy
Electric automaker Tesla (TSLA) could be facing a $460 million impairment charge on its sizable bitcoin holdings when it reports second-quarter earnings after the markets close on Wednesday, according to a note from Barclays analyst Brian Johnson.
This calculation assumes it hasn’t sold or added to its bitcoin (BTC) holdings in the quarter, something it hasn’t done since the first quarter of last year.
Tesla first bought $1.5 billion worth of bitcoin in January 2021 when the cryptocurrency was selling for around $32,000 to $33,000. Tesla sold about 10% of its holdings later in that first quarter, but has not bought or sold any of its bitcoin since then.
With bitcoin ending the second quarter at $18,731, Johnson, who is bearish on Tesla, expects the company to take an impairment charge on its total holdings of about $460 million, or roughly $0.40 a share, although those will be noncash charges.
According to accounting rules for digital assets, 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 unless the asset is sold.
Overall, Johnson kept his underweight rating on Tesla but raised his price target from $370 to $380 based on slightly higher earnings estimates overall.
Analysts polled by FactSet expect Tesla to report adjusted earnings of $1.81 on $16.5 billion in sales for the second quarter.
Tesla was trading up 0.6% to $741.03 in trading Wednesday. Shares are down almost 30% year to date.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
There have been recent concerns within the crypto community regarding Binance’s recent activities after a…
By launching its Macro Strategic Reserve, World Liberty Financial (WLFI) has advanced significantly and strengthened…
Bitcoin (BTC) continues to move within its one-week range after recovering from its recent drop…
Alexander Vinnik, the jailed former operator of once mighty bitcoin exchange BTC-e, is being released…
Founder: Nicolas Burtey Date Founded: September 2019 Location of Headquarters: United States Number of Employees:…
Bitcoin Twitter (or Bitcoin X) is having a moment after a 13F filing by Goldman…