- Tesla’s Bitcoin holdings surged by $600 million, reflecting new accounting rule benefits.
- Tesla’s net income growth highlights strong financial resilience.
Tesla’s latest earnings report highlights a significant boost from its Bitcoin [BTC] holdings, reflecting the impact of a new accounting rule that allows companies to adjust digital asset valuations based on market prices each quarter.
In Q4 2024, the electric vehicle giant reported a $600 million gain on its BTC reserves, with its total holdings standing at 11,509 BTC, valued at approximately $1.19 billion, according to Arkham Intelligence.
This marks a substantial increase from the previously recorded $184 million, underscoring Bitcoin’s growing influence on Tesla’s financial strategy.
Impact of the new FASB rule
For those unaware, the new Financial Accounting Standards Board (FASB) rule implemented in December 2023 has reshaped how corporations report their cryptocurrency holdings.
Under this change, companies can now reflect the fair market value of digital assets on their balance sheets. This aligns reported valuations with real-time market conditions.
Previously, firms had to record impairment losses when crypto prices declined. They couldn’t adjust valuations upward unless they sold the assets, often leading to undervalued financial statements.
As expected, Tesla benefited significantly from this revision. Tesla reported a Generally Accepted Accounting Principles (GAAP) income of $2.3 billion in Q4 2024, with $600 million attributed to gains from its BTC holdings.
Tesla’s Q4 earnings
Despite falling short of Wall Street expectations, Tesla’s Q4 earnings report brought a silver lining for investors. The company posted $25.71 billion in revenue, a modest 2% year-over-year increase but below the projected $27.22 billion.
Adjusted earnings per share also missed estimates, coming in at $0.73 instead of the expected $0.78. However, Tesla’s stock surged 4.3% in after-hours trading to $406.25, driven by optimism surrounding the $600 million boost from its Bitcoin holdings.
Currently, the stock stands at $389.10, with a drop of 2.26% according to Google Finance. Meanwhile, Bitcoin was trading at $105,450.36 after a 2.92% hike in the past 24 hours, as per CoinMarketCap.
With 11,509 BTC, Tesla remains one of the largest corporate BTC holders. The new accounting rule could also benefit other firms with crypto exposure, like MicroStrategy and Coinbase.
Tesla’s earnings report – 2024 recap
In conclusion, Tesla’s Q3 earnings report confirms that the company has opted to retain its Bitcoin holdings, dispelling rumors of a potential sell-off.
Despite transferring a significant portion of its BTC to unknown wallets, Tesla has maintained its digital asset position. This showcases a steady strategy toward its crypto investments.
The company’s revenue dipped slightly from Q2 to Q3, but its impressive surge in net income indicates a healthy balance between navigating the crypto market’s volatility and achieving strong financial results.
Tesla’s continued commitment to Bitcoin underlines its long-term confidence in the digital asset space. Its robust performance reflects resilience and adaptability in its broader business operations.
