Key Takeaways:
Tesla Inc. (TSLA) reported a $173 million after-tax impairment loss on its bitcoin holdings in the first quarter, though its stock rose four percent as investors focused on growth in higher-margin software revenue.
During the company's first-quarter update, management said it expects "hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits" over time, a sentiment investors appeared to embrace.
The electric vehicle maker’s bitcoin stash was unchanged at 11,509 BTC, but the company was forced to book the loss after bitcoin’s price fell from around $90,000 to $68,000 during the quarter. The results highlight the volatility associated with holding crypto assets on a corporate balance sheet.
The stock’s four percent after-hours rally suggests investors are prioritizing the company’s transition to a software and services model. Revenue from that segment surged 42 percent year-over-year to $3.75 billion, while the number of active Full Self-Driving (Supervised) subscriptions grew 51 percent to 1.28 million. This growth, along with a total gross margin improvement to 21.1 percent from 16.3 percent a year earlier, overshadowed both the crypto loss and a miss on total revenue.
Tesla first acquired bitcoin in February 2021, buying 43,200 BTC for approximately $1.5 billion. The company sold ten percent of that stash a month later. By July 2022, it had reduced its position to 9,720 BTC before a small addition in January 2025 brought holdings to the current 11,509 BTC level, where they have remained since.
The Q1 results show that while the digital asset strategy introduces earnings volatility, investors appear more focused on the growth of Tesla's high-margin software and services business. The continued expansion of FSD subscriptions will be a key metric to watch in the company's second-quarter report.
This article is for informational purposes only and does not constitute investment advice.
