Tesla's second quarter financial report for fiscal year 2021: Net profit exceeds US$1 billion for the first time, and Bitcoin-related assets are impaired by US$23 million

Tesla today released its second quarter financial report for fiscal year 2021. As of the end of the second quarter of 2021, the company held $1.311 billion in Bitcoin, did not sell its Bitcoin position in the second quarter, and had an impairment loss of $23 million related to Bitcoin.

Additionally, the company reported second-quarter net revenue of $1.14 billion, surpassing $1 billion for the first time and a tenfold increase year-over-year. Sales nearly doubled, far exceeding Wall Street expectations, but the company's stock price did not rise because the Silicon Valley electric car maker delayed the launch of its commercial truck Semi due to limited battery supply and ongoing supply chain obstacles.

Tesla reported revenue up 98% to $11.96 billion from $6.04 billion a year ago, which the company attributed to "significant growth" in vehicle sales and growth in its other businesses.

Analysts surveyed by FactSet expect Tesla to report sales of $11.51 billion and adjusted earnings of 94 cents per share for the quarter.

Auto ASP fell 2% year-over-year due to lower Model S and Model X deliveries in the second quarter due to product updates and lower average selling prices for cars made in China.

As previously reported by BitPush, Tesla announced in February that it had purchased $1.5 billion worth of Bitcoin. Later in the first quarter, the company cut its Bitcoin position by 10%, increasing its first quarter earnings by $272 million.

Bitcoin is considered an inventory asset, which means that under generally accepted accounting principles, its value is recorded at the lowest price Bitcoin hit during the quarter. Companies record the value of Bitcoin at the time of purchase in their accounts. If the price rises, they cannot record those gains until they sell. However, if the value of Bitcoin falls, the company must write down the value of its holdings as an impairment charge.

Tesla’s second-quarter earnings cover the period from March 1 to June 30, including the period in late June when Bitcoin plunged to around $28,000.

In May, Musk announced that Tesla would no longer accept Bitcoin as a form of payment due to environmental concerns about Bitcoin mining using coal and other fossil fuels. However, earlier this month, Musk said that Bitcoin's environmental status is improving and Tesla may resume accepting Bitcoin payments.

Tesla's second quarter earnings report showed that total automotive revenue was $10.21 billion, of which only $354 million (about 3.5%) came from the sale of regulatory credits. This figure is lower than any of the previous four quarters. The automotive gross margin was 28.4%, higher than any of the past four quarters.

For the quarter ending June 30, 2021, Tesla has reported deliveries of 201,250 electric vehicles (the closest approximation to sales) and a total production of 206,421 vehicles.

The company also reported $801 million in revenue from its energy business, which includes solar photovoltaics and energy storage systems for homes, businesses and utilities, up more than 60% from the previous quarter.

The company now operates 598 stores and service centers, and a mobile service fleet of 1,091 vehicles, up just 34% from the same period last year. In contrast, vehicle deliveries increased 121% year-over-year.

A $23 million impairment related to the value of its bitcoin holdings was reported as an operating expense under "restructuring and other."

The company's cash position fell about 5% from the previous quarter to $16.23 billion. The company said in its earnings report that the decline was driven primarily by $1.6 billion in net debt and finance lease repayments, partially offset by $619 million in free cash flow.

Accounts payable -- the amount Tesla owes to suppliers and other service providers -- rose 13.7% from the previous quarter to $7.56 billion.

During the quarter, Tesla faced a backlash from Chinese consumers, recalls in China and the United States, and delayed deliveries of the Model S Played, a high-performance version of its flagship sedan, among other challenges.

The electric car company mentioned bitcoin or cryptocurrency just once in its second-quarter earnings report after CEO Elon Musk went back and forth on whether Tesla would accept the digital currency for purchases of its vehicles.

In February, Tesla announced it was spending $1.5 billion on Bitcoin, exceeding its entire quarterly research and development budget, and said it may continue to invest in cryptocurrencies. As of the end of March, the company said its investment was worth $2.48 billion based on the surge in Bitcoin in the first quarter.

Tesla reported a net gain of $101 million from bitcoin sales in the first quarter, helping to lift its net profit to a record high. The gain showed up as a reduction in operating expenses on the company’s operating statements, suggesting it sold some of the bitcoin as its price rose during the quarter.

But bitcoin prices plunged more than 40% in the second quarter, so the value of Tesla's bitcoin holdings will be much lower than at the end of the first quarter. The cryptocurrency peaked at more than $63,000 in April before falling below $30,000 earlier this month. Today, the price of bitcoin has exceeded $40,000.

Tesla shares rose 1.4% to $666.59 in after-hours trading on Monday. The stock, one of the market's best performers in recent years, has fallen more than 25% since January.