Elon Musk is the CEO of Tesla, an electric vehicle manufacturer. Musk claims that Tesla sold the majority of its bitcoin holdings in the second quarter of 2022 to strengthen its cash position in light of the pending Covid lockdowns in China. During the company’s earnings call on Wednesday, he said this.
Despite selling majority of its Bitcoin asset to boost the company’s cash position, Musk is not dismissing the possibility of buying them back in the future. He said Tesla is open to increasing its bitcoin holdings again in the future and noted that the second-quarter sale, “should not be taken as some verdict on Bitcoin.”
According to Musk during the conference call, he emphasized that the sale was mainly “about overall liquidity for the company given Covid shutdowns in China.” He also mention that Tesla did not sell any of its Dogecoin holdings.
Did you know
- Creebhills earlier reported that Tesla sold $936 million worth of bitcoin (BTC), representing 75% of its holdings, in the second quarter of 2022.
- It sold its bitcoin for an average price of around $29,000 per bitcoin, avoiding a substantial impairment charge by selling earlier in the quarter since bitcoin ended the second quarter at a price of about $18,700.
- The price of bitcoin initially fell about 1.7% to $23,300 from $24,200, following the release of Tesla’s second-quarter earnings report, which contained news of its sale.
- The average sell price suggests that the company’s sale was the majority reason we saw the massive selling pressure that saw Bitcoin fall below $20,000 as more coins dominated crypto exchanges.
- This is not the first time Tesla is selling a portion of its Bitcoin holdings since it began adding the asset class to its balance sheet. The EVM sold a portion of its BTC reserves in March 2021, realizing a net profit of $128 million.
- At the time, CEO Elon Musk explained that the sale, which amounted to 10% of Tesla’s holdings, was to “prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”
The EVM recorded a total sale of $16.93 billion in the second quarter of 2022, down 9.71% when compared to the first quarter of the year. When compared YoY, Tesla’s revenue is up approximately 42% For its fiscal second quarter, Tesla reported adjusted per share earnings of $2.27 on revenues of $16.93 billion.
Automotive gross margins were down compared with the first quarter and a year ago due to inflation and growing competition for electric vehicle components, such as battery cells.