Tesla Sold $936M Worth of Bitcoin in Second Quarter

Electric car maker Tesla (TSLA) sold $936 million worth of bitcoin (BTC), or 75% of its holdings, in the second quarter, the company reported Wednesday in its earnings report.

• CEO Elon Musk said during Tesla's earnings call that the company sold the majority of its bitcoin to maximize its cash position, "given the uncertainty of the COVID lockdowns in China." He added, however, that Tesla is open to boosting its bitcoin exposure in the future, and "this should not be taken as some verdict on Bitcoin." Musk also said Tesla had not sold any of its dogecoin.
• The price of bitcoin fell about 1.7% to $23,300 immediately following the release of the earnings report, but rebounded to its previous levels after Musk made his comments on the earnings call.
• Tesla ended the second quarter with just $218 million in bitcoin (BTC), down from $1.26 billion in the previous three quarters. The company said it realized a gain on the sale of its holdings, which was offset by impairment charges on the remainder of its bitcoin, resulting in a net cost of $106 million to its profit and loss statement.
• The company held about 42,000 bitcoin heading into the quarter, so if it sold 75% of that amount for $936 million, that would equate to an average selling price of about $29,000 per bitcoin. Bitcoin ended the second quarter at a price of about $18,700, meaning Tesla avoided a substantial impairment charge on its holdings by selling earlier in the quarter.
• Tesla announced in Feb. 2021 it had purchased $1.5 billion worth of bitcoin, a move that caused the price of bitcoin to surge. Later in that first quarter the company trimmed its bitcoin position by 10%, a sale that boosted that quarter’s earnings by $272 million. It had not bought or sold any more bitcoin until the most recent announcement.
• The company began accepting bitcoin as payment for its vehicles in March of last year, but Musk reversed that decision about six weeks later, citing concerns about the environmental impact of mining bitcoin.
• Overall for the second quarter, Tesla reported adjusted earnings per share of $2.27, beating the consensus of analyst estimates reported to FactSet of $1.81 a share, on revenue of $16.9 billion, ahead of a $16.5 billion estimate. Shares of Tesla were rising 0.7% to 746.78 in after-hours trading.
• A company call with analysts is scheduled for 5:30 p.m. ET (21:30 UTC).

UPDATE (July 20, 20:32 UTC): Adds information about Tesla's average selling price in the fourth bullet point.

UPDATE (July 20, 21:08 UTC): Adds additional background and earnings information.

UPDATE (July 20, 22:02 UTC): Updated with Musk's comments on the earnings call and subsequent BTC price movement.

UPDATE (July 21, 15:36 UTC): Added information on Tesla's gain and losses from its bitcoin holdings.