Tesla’s most recent financial report demonstrates a notable surge in profits attributed to its Bitcoin [BTC] holdings, showcasing the impact of a fresh accounting regulation that permits companies to adjust the valuation of digital assets based on market prices each quarter.
During the fourth quarter of 2024, the electric vehicle manufacturer reported a $600 million increase in the value of its BTC holdings, with a total of 11,509 BTC valued at around $1.19 billion, as per Arkham Intelligence’s data.
This uptick signifies a substantial growth compared to the previously stated $184 million, emphasizing the increasing influence of Bitcoin on Tesla’s financial planning.
Effect of the new FASB guideline
The recent regulation put forth by the Financial Accounting Standards Board (FASB) in December 2023 has reshaped the reporting of cryptocurrency holdings by corporations.
Under this regulation, companies are now able to depict the fair market value of digital assets on their financial statements, aligning valuations with the current market scenario.
Prior to this alteration, companies were required to acknowledge impairment losses in case of a dip in crypto prices. The ability to adjust valuations upwards without selling the assets was limited, often resulting in underestimated financial reports.
As anticipated, Tesla reaped significant benefits from this amendment, as evidenced by a Generally Accepted Accounting Principles (GAAP) income of $2.3 billion in Q4 2024, with $600 million stemming from profits on its BTC investments.
Tesla’s Q4 financial performance
Despite falling short of the expectations set by Wall Street, Tesla’s fourth-quarter financial outcomes bring positive news for stakeholders. The company recorded revenue of $25.71 billion, a modest 2% year-on-year increase but below the anticipated $27.22 billion.
Adjusted earnings per share also failed to meet predictions, standing at $0.73 instead of the expected $0.78. Nevertheless, Tesla’s stock rose by 4.3% in after-hours trading to $406.25, driven by the optimism surrounding the $600 million boost from its Bitcoin holdings.
Presently, the stock is valued at $389.10, depicting a 2.26% decline according to Google Finance. Concurrently, Bitcoin was trading at $105,450.36 after a 2.92% surge in the past 24 hours, according to CoinMarketCap.
With a Bitcoin balance of 11,509, Tesla remains among the top corporate entities holding BTC. The revised accounting principle may also prove beneficial for other companies with exposure to cryptocurrencies such as MicroStrategy and Coinbase.
Overview of Tesla’s 2024 financial report
In summary, Tesla’s Q3 financial report signifies the company’s decision to retain its Bitcoin holdings, quashing any rumors of a potential sell-off.
While transferring a considerable portion of its BTC to undisclosed wallets, Tesla has upheld its position in digital assets, showcasing a consistent approach to its crypto investments.
Although the company experienced a slight revenue decrease from Q2 to Q3, the substantial increase in net income indicates a balanced strategy in navigating the volatile crypto market and achieving robust financial outcomes.
Tesla’s prolonged commitment to Bitcoin highlights its enduring confidence in the digital asset realm. Its strong performance underscores resilience and adaptability in its overall business strategies.