Do repost and rate:
Nelson Wang
Nelson Wang is CoinDesk's news editor for the East Coast. He holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.
Electric automaker Tesla (TSLA) could be facing a $460 million impairment charge on its sizable bitcoin holdings when it reports second-quarter earnings after the close on Wednesday, according to a note from Barclays analyst Brian Johnson.
- This calculation assumes it hasn’t sold or added to its bitcoin holdings in the quarter, something it hasn’t done since the first quarter of last year.
- Tesla first bought $1.5 billion worth of bitcoin in Jan. 2021 when the cryptocurrency was selling for around $32,000 to $33,000. Tesla sold about 10% of its holdings later in that first quarter, but has not bought or sold any of its bitcoin since then.
- With bitcoin ending the second quarter at $18,731, Johnson, who is bearish on Tesla, expects the company to take an impairment charge on its total holdings of about $460 million, or roughly $0.40 a share, although those will be non-cash charges.
- According to accounting rules for digital assets, if the price of an asset falls during a quarter, a company must report an impairment. But if the price increases, it is not reported as a gain on the balance sheet unless the asset is sold.
- Overall, Johnson kept his underweight rating on Tesla but raised his price target from $370 to $380 based on slightly higher earnings estimates overall.
- Analysts polled by FactSet expect Tesla to report adjusted earnings of $1.81 on $16.5 billion in sales for the second quarter.
- Tesla was trading up 0.6% to 741.03 in trading Wednesday. Shares are down almost 30% year to date.
