Tesla (TSLA, Financial) reported a significant boost in fourth-quarter net profits, driven by a change in accounting rules for digital assets. The value of its Bitcoin holdings surged to $1.08 billion, up from $184 million in the previous quarters. This change follows the Financial Accounting Standards Board's (FASB) policy requiring companies to report digital assets at market value each quarter starting in 2025. Previously, companies recorded Bitcoin at the lowest value during the holding period, regardless of subsequent price increases.
This adjustment increased Tesla's Q4 earnings per share by 68 cents, with net profits rising by $600 million, as highlighted by CFO Vaibhav Taneja. Although Tesla's Bitcoin holding at the end of Q3 was recorded at $184 million, its fair market value was significantly higher at $729 million, indicating a real increase of approximately $347 million due to Bitcoin's price rise during the quarter. This rally is partly attributed to optimism regarding a potential second-term Trump administration.
Despite fourth-quarter revenues and earnings per share falling short of market expectations and an 8% year-over-year decline in automotive revenue, Tesla's stock saw an uptick in after-hours trading. The company points to advancements in autonomous driving technology and new model plans as key growth drivers for 2025.
