By Tesla Inc (NASDAQ: TSLA) attributed a significant increase in its quarterly net earnings last night to its bitcoin holdings.
The company recorded $1.08 billion as the carrying value of its bitcoin holdings in its fourth-quarter release – up sharply from $184 million at the end of Q3.
That translates to an increase of a whopping $896 million.
But does that mean the EV maker was on a BTC buying spree in its recently concluded quarter? Not really.
Much of the increase, in fact, was related to a change in how the Financial Accounting Standards Board now wants companies to report their digital asset holdings.
FASB rule change impact on Tesla’s bitcoin holdings
FASB recently changed its policy and now mandates the US companies to mark their crypto asset holdings to market each quarter.
So far, they were required to disclose their bitcoin holdings at the asset’s lowest price during their ownership.
The rule change resulted in a 68 cents per share boost to Tesla’s earnings in the fourth quarter.
According to Vaibhav Taneja – the company’s chief of finance:
It’s important to point that the net income in Q4 was impacted by a $600 million mark-to-market benefit from bitcoin due to the adoption of a new accounting standard for digital assets.
Tesla stock is up 3.0% in premarket trading on Thursday.
Tesla still missed earnings estimates in its fiscal Q4
Despite a big boost to earnings from bitcoin holdings, Tesla Inc failed to beat analysts’ estimates in its fiscal fourth quarter.
The electric vehicle behemoth earned 73 cents on a per-share basis – meaningfully below 76 cents a share that experts had forecast for its Q4.
TSLA cited lower average selling prices across the entire range of its vehicles as the primary reasons for the quarterly weakness.
Late on Wednesday, the Nasdaq listed firm disclosed a 71% decline in its fourth-quarter net income but said “we expect the vehicle business to return to growth in 2025.”
Wells Fargo sees downside in Tesla stock to $125
Despite the earnings hit, the EV maker managed to come in slightly ahead of revenue estimates in its fiscal fourth quarter.
But that wasn’t enough for Wells Fargo analyst Colin Langan to change his view on Tesla stock.
Reiterating his “underweight” rating and a $125 price target in a note this morning, he said:
We see moderating delivery growth driven by lower demand and diminished return on price cuts. We’re cautious on margins given likelihood of more price cuts and lower volumes.
Additionally, Langan also sees increased regulation on autopilot as a significant risk for the company’s true FSD plans.
However, he has a bit of a contrarian view on Tesla stock considering the Wall Street at large currently rates it at “hold” on average.
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