What is the reason behind Bitcoin becoming the only factor that drags down Tesla’s performance?
Original title: Bitcoin is the only factor that drags down Tesla’s performance. What is the reason behind it?
On July 26, the electric vehicle manufacturer Tesla handed over a very impressive second-quarter financial report. The main indicators are rising, but only one indicator that drags down Tesla has become this quarter. The only flaw in the financial report is Bitcoin.
As we all know, Tesla has announced a high-profile purchase of $1.5 billion in Bitcoin since the first quarter of this year, as a way for the company to allocate excess cash. At that time, the market had mixed opinions on Tesla’s move. Sla actually highly tied his stock price trend to Bitcoin. This statement has a certain degree of rationality, which is also confirmed by the high correlation between the performance of Tesla’s stock price trend and Bitcoin.
But the most direct impact of Bitcoin on Tesla is reflected in its financial report. According to the United States General Accounting Standards, digital currency assets such as Bitcoin need to be identified as intangible assets in the financial report. The usual accounting treatment of intangible assets requires an impairment test in each financial report quarter and corresponding impairment. The amount is directly included in the income statement.
Therefore, in the second quarter’s financial report, we can clearly see that Tesla has devalued Bitcoin by $23 million, and the value of the corresponding digital currency assets in Tesla’s balance sheet is changed from the first quarter. The last $1.331 billion dropped to $1.311 billion at the end of the second quarter.
In contrast, we can see from Tesla’s earnings report in the first quarter that Tesla sold the $1.5 billion in bitcoins it bought and made a profit of $101 million.
Therefore, according to this accounting treatment method, unless Tesla actually sells bitcoins, the best result for bitcoins under intangible assets is that the value does not change. The high probability is that a corresponding impairment will be required every quarter. , Which is why Bitcoin will only be a drag on Tesla’s earnings as long as it exists in Tesla’s accounts for one day.
But another advantage of this is that the sharp drop in the Bitcoin market price will not bring corresponding changes in the same magnitude of the Bitcoin assets held by Tesla. For example, during the quarter, Bitcoin once changed from The high of $60,000 in April fell to a low of $30,000, and Tesla does not need to account for this part of the decline in bitcoin prices.
From the perspective of its main business, Tesla set several new records this quarter. For example, the delivery of electric vehicles exceeded 200,000, and the net profit exceeded $1 billion in a single quarter for the first time. At the same time, the profitability was significantly improved. The profit margin reached 11%, the highest in recent years. Another point worth mentioning is that Tesla’s performance’s reliance on carbon emissions indicator revenue has gradually declined. In absolute terms, this revenue in the second quarter was US$354 million, a decrease of 17% from the same period last year. In terms of numbers, the carbon emission indicator revenue accounted for less than 3% of Tesla’s total revenue this quarter, compared with more than 7% in the same period last year.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-is-the-reason-behind-bitcoin-becoming-the-only-factor-that-drags-down-teslas-performance/
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