Rivian Forum – Rivian R1T & R1S News, Pricing & Order... banner

1 - 7 of 7 Posts

·
Registered
Joined
·
531 Posts
Discussion Starter · #1 ·
Tesla has been selling off some of their bitcoin to help boost their profits. Tesla’s shareholder update revealed that sales of bitcoin made a $101 million “positive impact” to their profitability.

Overall Tesla reported a net profit of $438 million on a GAAP basis for Q1.


Tesla reported first-quarter results on Monday, including a record quarterly net profit of $438 million on a GAAP basis.

As usual, those profits were buoyed by sales of environmental regulatory credits. But in a new wrinkle this quarter, the company’s sales of bitcoin during the quarter also contributed $101 million toward the bottom line.

In February, Tesla made waves when it announced a $1.5 billion purchase of bitcoin and said it may continue investing in cryptocurrency more broadly.

On Monday, Tesla’s shareholder update revealed that sales of bitcoin made a $101 million “positive impact” to the company’s profitability during the period ending March 31, 2021.

On the company’s cash flows statement for Q1 (page 26), it recorded $1.5 billion in purchases of “digital assets,” as well as $272 million in proceeds from sales of digital assets during the quarter.

Elsewhere (page 5), the company says its profitability was helped from a sale of bitcoin which contributed a $101 million “positive impact, net of impairments, in ‘Restructuring and Other.’” This shows up as a $101 million reduction in operating expenses on the company’s Statement of Operations (page 24).

This suggests that the company quickly flipped some of its big bitcoin purchase for a gain of $101 million, as bitcoin prices rose during the quarter.

As CFO Zachary Kirkhorn said during the earnings call, “Elon and I were looking for a place to store cash” that wasn’t immediately being used to get returns. But they had a need to be able to access their cash quickly too.

“Bitcoin has proved to be a good decision, a good place to put some of our cash that’s not being used for daily operations…and be able to get some return on that.” Kirkhorn added that while they were pleased with the liquidity of the bitcoin market, “It is our intent to hold long-term.”

Tesla does accept bitcoin payments from customers now.

But apart from that, it’s not clear how investments in and use of cryptocurrency serve the mission of Elon Musk’s electric vehicle and energy storage business. The stated mission of Tesla has long been to “accelerate the world’s transition to sustainable energy.”

Vicki Bryan, founder of the bond investment research firm Bond Angle, wrote in an e-mail to CNBC:

“Bitcoin is not fungible or logically advantageous as currency, arguably not safer for the owner vs cash in transactions, and inexcusably damaging to the environment.”

Tesla had historically racked up around $1.6 billion in regulatory energy credits, primarily zero emission vehicle credits, Bryan notes. Credit sales helped Tesla to report more than four consecutive quarters of profitability, qualifying Tesla for addition to the S&P 500 index.

With Tesla’s bitcoin purchases, Bryan says, Tesla is adding a volatile asset with limited reported visibility to financial statements which “already conceal vital clarity of key operations and financial conditions.”
 

·
Registered
R1S, Forrest Green/Black
Joined
·
112 Posts
I wonder if you take out the carbon credits and bitcoin stuff is Tesla a profitable 'car' company. Last quarter that was not the case. More power to them but its an issue long term.
 

·
Registered
Joined
·
125 Posts
I wonder if you take out the carbon credits and bitcoin stuff is Tesla a profitable 'car' company. Last quarter that was not the case. More power to them but its an issue long term.
Pretty sure they have not had a profit in any quarter without the credits. As more manufacturers start building EVs the value stream for the credits will dry up.

They do have a new battery cell that will lower their cost shortly that will help.

I have no clue how their stock has the value it does. My opinion they are at least 6 to 7 times too high.
 

·
Registered
Joined
·
1,193 Posts
Pretty sure they have not had a profit in any quarter without the credits. As more manufacturers start building EVs the value stream for the credits will dry up.

They do have a new battery cell that will lower their cost shortly that will help.

I have no clue how their stock has the value it does. My opinion they are at least 6 to 7 times too high.
Do you think the stock is a bubble or could it actually maintain those levels in the coming years?
 

·
Registered
Joined
·
125 Posts
Do you think the stock is a bubble or could it actually maintain those levels in the coming years?
I am not a financial analyst and this is not any legitimate prediction, only offering it as a layman's perspective.

My personal opinion is it is a huge bubble. A company with a high PE is usually in the 70-80 range. Tesla's PE is at 710 today.

Stock price was 71.00 in November 2019 closed at 709 today, my opinion the 71 price makes more sense even today, there PE would be high at 71 but more in line with trend setters on the forefront. Even if they had a high PE like Fiat at 210 the stock would be 212.00

They are valued at more than all of these other companies combined based on Stock price and outstanding shares.

Tesla - PE 710 - Valuation 380 B

Ford - PE 21 - Valuation 49 B
GM - PE 13 - Valuation 81 B
Fiat -PE 210 - Valuation 32 B (crazy high PE as well)
Daimler - PE 10 - Valuation 78 B EU
BMW -PE 12 - Valuation 65 B

There are so many EVs coming to market in the next 6 to 24 months, many from main stream manufactures, so they will start getting a lot of competition for market share. That could be a challenge for them with their quality and service department history.

They do still have a huge advantage with their Super Charger network. They also have a new battery cell coming out in the next 12 to 24 months that should be more dense and cheaper to manufacture so that is a benefit as well. But that should allow them to start being profitable at current prices. They have not been able to make a profit so far with manufacturing so I do not think they will be having lower cost vehicles with the new battery.

They are showing profits now because they are selling ZEV credits. Without those credits and bit coin in the last quarter they would have lost 181 million. As more companies move to EVs the market for the ZEV credits will start drying up.
 

·
Registered
R1S, Forrest Green/Black
Joined
·
112 Posts
Being profitable doing something that isn't your main reason for existing is just so odd.

Imagine if Sony came out and said 'We wouldn't be profitable except for our potato farms, they are really bringing it in'

Tesla is playing a very dangerous game, not only is the competition for EVs getting heavier but their only profits come from carbon tax credit sales and bitcoin..... What happens when that dries up?
 
1 - 7 of 7 Posts
Top