Guys. It's sasha tesla published their quarterly results last week and i was going going through the numbers to update my valuation model as i was digging into some these numbers to understand them better one thing struck me as being really odd that thing was bitcoin tesla made references to bitcoin in the slides that they published before the earnings score. And then talked about bitcoin on the earnings school and then this morning tesla published their 10q form that goes into a bit more detail still about bitcoin. The big problem is that the information in those three.

Just doesn't stack up and that to me is quite concerning you've probably already seen tesla's q2 results. I covered them live on my channel. When they came out if you weren't there. But you would like to be there next time make sure you subscribe to the channel and hit the bell.

So you get notifications as and when that happens so you get the analysis live as the numbers come out. But i'm not going to bore you with the high level numbers. That you probably already know and the issue with tesla selling bitcoin really had me raising my eyebrows. Though and i know i know how dare.

A tesla investor not like something to do with tesla that is absolute sacrifice especially on youtube. The unwritten rule of talking about tesla on youtube is that you must at all times revere. The company praised elon musk as being the god where royce taking spectacles and declare everything to be absolutely amazing. But i have a feeling that maybe there are some of you out.

There who want to hear actual analysis and insight rather than just fan club commentary. So here we go at the risk of getting a huge amount of dislikes in. January 2021. Tesla bought 15.

Billion dollars of cryptocurrency almost all of it being bitcoin and they then went and sold 272 million dollars at a profit leaving him with 133. Billion dollars at the end. The annual report filed in february. 2021.

Had this paragraph. That said in january. 2021. We updated.

Our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash. That is not required to maintain adequate operating liquidity as part of the policy. Which was duly approved by the audit committee of our board of directors. We may invest a portion of such cash in certain alternative reserve assets including digital assets gold bullion gold exchange traded funds and other assets as specified in the future now clearly the references to gold bully.

And ats were just added to make this new company policy of buying bitcoin sound. A little bit better. So. The stated goal was to maximize returns on a cash.

That is not required to maintain adequate operating liquidity fast forward to the last quarter q2. 2022 and tesla has now sold most of their bitcoin to be precise they sold about 75 percent of their bitcoin for 936 million dollars worth of cash and the reason elon musk. Gave for selling bitcoin was because the shanghai factory was forced to close and tesla had to manage their cash position risks. Yeah.

Actually it should be mentioned that um. The reason we sold a bunch of bitcoin holdings was that we were uncertain as to when the covert uh lockdowns in china would alleviate uh so it was important for us to maximize our cash position uh. Given the uncertainty of the covered lockdowns in in. China and this is where the problems really start because tesla has 183 billion dollars worth of cash as of the end of last quarter so even without the 936 million dollars worth of cash that they got from selling bitcoin that's still 174.

Billion dollars sitting in a literal bank account. They also have 591 million dollars in short term. Marketable securities. And by the way in this quarter.

That tesla were apparently really concerned for their cash position they increased their short term multiple securities by 83 million dollars interesting now when you add the 21 billion dollars in accounts receivable tesla had over 20 billion dollars worth of cash or cash equivalents before selling any bitcoin in the last quarter tesla's total current. Liabilities as of the end of last quarter are at 218. Billion dollars. So tesla has roughly enough cash at the moment to meet their liabilities for the next 12 months without having to sell a single car and on top of that tesla has the berlin and austin factories.

That are ramping up fast and the factory in fremont has just set a record quarter. So unfortunately the excuse that bitcoin was sold to manage the cash position is and the thing is when you dig a little bit deeper into this mess. It gets a whole lot worse because i'm going to look at the numbers. So in the 10 q.

That just came out this morning it says in the six month period and it's june 30th 2022. We recorded 170 million dollars worth of impairment losses resulting from changes to the carrying value of a bitcoin and gains of 64 million on certain conversions of bitcoin interfered currency by us. When tesla bought bitcoin during january 2021 the price of bitcoin oscillated somewhere between 29. 000 and 42.

000 and in q3 2021 tesla posted a 53 impairment charge on bitcoin where the value dropped from. 1311 billion to 126. Billion dollars on tesla's balance sheet the lowest bitcoin price in q3 2021 was around 29. 600 on july.

20th. So if you add back the 53. Percent. That means tesla bought their bitcoin at an average price of something like thirty one thousand three hundred dollars.

All right this is going to get a little bit deeper. So tesla added a further 170 million dollars worth of impairment during q2 and then made gains of 64 million dollars on disposing of 936 million dollars of bitcoin during the quarter. We know that tesla kept 25 of their bitcoin from their report that came out just before the earnings call and the lowest bitcoin price. During q2 this.

Year was about 19. 000 at the end of q1 tesla had 1261 billion dollars of digital. Assets so 1261 billion dollars times 25 times 30 200 minus 19 000. Divided by 30 200 equals 117 billion dollars.

And that is the value of the impairment. The tesla would have posted on the bitcoin they kept to the end of the quarter. So that means that tesla booked about 53 million dollars worth of impairment on the bitcoin that they sold which means that the value of that bitcoin dropped by 56. From the lowest point.

It was ever at before the start of this quarter. Until the lowest point before the point at which they sold it so the price dipped to around twenty eight thousand five hundred dollars. If you do the math. Which it did incidentally do roughly on may 18th and then that bitcoin went up in value from that lowest point because remember tesla also made six point eight percent in gains on disposal.

So tesla must have sold the bitcoin that's roughly speaking at an average price of thirty thousand four hundred dollars and selling bitcoin in amounts of about a billion dollars is going to take a little while so they must have done it at some point based on this calculation between the 30th of may and the 7th of june. If tesla was selling any bitcoin when the shanghai factory was first shot at the beginning of april. They would be selling at 46 000. So their gains would be roughly 50 percent of the value at which they would be selling so they would have only been able to sell around 120 million dollars of bitcoin at that price.

And even in late april at 40 000. Per. Bitcoin tesla. Would only be able to sell about 190 million dollars worth of bitcoin for that same 64 million realized gain.

So using their own numbers. There is no other point during q2 at which tesla could have sold that large chunk of bitcoin to hit those specific impairment and gain numbers. But on the 19th of april giger. Shanghai had already reopened on a closed loop system more than a month.

Before the point. At which they would have potentially started selling their bitcoin and full production shanghai resumed at the end of may remember. June was the record month for giga. Shanghai's production.

So the numbers indicate that tesla sold their bitcoin after the whole. Shanghai episode was over after the lockdown had finished in fact tesla was very lucky because if they didn't sell during that narrow window. When there was a little blip. They would have had to post on almost 500 million dollars worth of impairment as bitcoin's price plunged even further later on in june to me.

It just looks like elon musk. Realized that he made a bad mistake in gambling. One and a half billion dollars worth of tesla's money and as the price of bitcoin was going down. He decided that he needs to manage the risk and not go all the way down with it and get rid of that bitcoin before it falls even further to maybe somewhere roughly break even q2 was already bad so this was a damage limitation exercise.

I guess the small amount of bitcoin and dogecoin. The tesla left over was there so that tesla can pretend that they didn't just realize. It was a giant mistake. And that this isn't just a complete total liquidation of all those assets because if that was the case that would look considerably worse.

But the real issue for me is that this is pointing to a deeper problem for tesla. Which we all knew was there really beforehand where all of the great innovation. You know for all the great engineering. That tesla is showcasing there is this dark other side to the company where tesla is happy taking on potentially unwarranted risks and potentially you know gambling money.

So as a tesla shareholder. This is a pretty important risk to be aware of and this time it didn't work out too badly. But next time it could get considerably worse whatever that next time is if you found this video useful please don't forget to smash the like button for the youtube algorithm thank you so much for watching i really appreciate it and as always i'll see you guys later.