Tesla's high-profile investment in Bitcoin may have cast a cloud over the company's stock price.
Bitcoin’s 40% plunge in the second quarter could have serious ramifications for Tesla’s bottom line, according to a CNBC analyst.
The electric vehicle manufacturer invested $1.5 billion into the cryptocurrency at the start of the year — later selling 10% of this holding in order to prove its liquidity. However, Bitcoin’s price is now battling to stay above the level where Tesla made its purchase.
According to Kate Rooney, accounting rules mean that companies would have to register an impairment charge if Bitcoin’s value falls below the price it made its purchase — and this would show in its financial statements.
She went on to claim that unnamed sources have suggested this impairment charge could trigger a loss of $25 million to $100 million.
Tesla is due to announce its latest quarterly results toward the end of the month.
There are fears that the company’s high-profile investment in Bitcoin has also been weighing heavily on the value of Tesla stock.
At the time of writing, TSLA has fallen by 10% since the start of this year, hitting $659.58. It’s also a long way off the 52-week highs of $900 that were seen back in January.
It also remains to be seen whether Tesla ended up selling even more of its Bitcoin holdings. Such an announcement would inevitably spook the crypto markets, especially considering how the digital asset fell sharply when Elon Musk announced the company was suspending accepting BTC as a payment method over environmental concerns.