Tesla Could Face a $460M Impairment Charge on Its Bitcoin Holdings in Q2

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.

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