Bet on Bitcoin – It’s here strategy chosen by Tesla for several years now. And, in this ice age, the society ofElon Muska strong supporter of DogeCoin, recorded a net loss of $140 million in its investments in bitcoin (BTC). This significant loss, like the fall in the price of the king of cryptocurrencies, however, does not seem to have a significant impact on the finances of the company, which benefits from a solid balance sheet. Fasten our seatbelts: explanations.
Tesla and an off-the-shelf strategy: bitcoin investing
Let’s not go at top speed and start our business from the beginning. You’re here is known for its bold and innovative approach in terms of investment. In January 2022, the company even announced that it would invest $1.5 billion in bitcoins. Payments in cryptocurrencies were even once on the agenda for Elon Musk’s electric cars.
However, in the face of bitcoin evidence that also affects institutions, Tesla saw investing in BTC as a way to diversify and maximize long-term profits.
>> Boost your wallet! Join Trade Republic and receive €20 in shares (trade link) <<
A $140 million BTC speeding ticket
But hell! The year 2022 and the crisis of confidence who accompanied her passed by. The market is fragile. Bitcoin is falling. This fall then resulted in a considerable loss for Tesla, which sold part of its assets to cover the costs, in bitcoinbut also in TSLA stock. The company records according to a document provided to the SEC gross losses of $204 million to $64 million profit.
However, it is important to note that this loss represents only a small fraction of Tesla’s total balance sheet. The company continues to benefit from a solid financial performance thanks to its principal activities in the automotive sector.
Furthermore, the wishes of the company dElon Musk towards the king of cryptocurrencies do not seem to be damaged by the crypto winter. Quite the contrary. The company explains that it recognizes the value of its assets at a time T, but that does not mean that these same assets will not have more value later, and vice versa. In other words, these figures are not necessarily revealing in the long term. In fact, Tesla’s report submitted to the SEC, dense with a hundred pages, could be summed up in this quote:
“As with any investment and consistent with how we manage fiduciary cash and cash equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on business needs and our vision. market and environmental conditions. Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Therefore, any decline in their fair values below our carrying values for these assets at any time after their acquisition will require us to record impairment charges, whereas we cannot make any upward revisions for any increase in the price of the market until a sale. For any digital assets held now or in the future, these charges may adversely affect our profitability during periods in which such impairments occur, even if the overall market value of such assets increases. For example, during the year ended December 31, 2022, we recorded $204 million in impairment losses resulting from changes in the carrying value of our bitcoins and $64 million gains on certain bitcoin to fiat currency by us.”
Tesla Annual Report – Source: Sec.gov
Although the loss of $140 million in bitcoin is considerable, it does not seem to have had a significant impact on the finances of You’re here. The company took a risk by investing in Bitcoin. However, she still believes in cryptocurrency and sees a future in which it can become widely accepted as means of payment. Elon Musk confirm this appetite for cryptocurrency with regularity. Whether at McDonald’s or even on Twitterthe multi-billionaire puts the gum.
Petrol or electric? Cheese or dessert ? Stocks AND cryptos! Why choose since you can have both on the same platform? Join Trade Republic now. You will receive a bonus of €20 in shares (commercial link).