When it comes to Tesla’s earnings, it is about one main headline, and that is how Tesla added nearly $101 million in profit to its Q1 earnings. Tesla announced that it bought $1.5 billion worth of “digital assets” during Q1 but then the company sold nearly 272 million worth of Bitcoin during Q1 as well. The question, which many investors are asking themselves, is if this will become a regular occurrence for Tesla and if profits made through trading of Bitcoin will continue to be accounted for in reducing its operating expenses.
Nonetheless, Tesla has left a clear path for other S&P 500 companies to learn how to use this asset, Bitcoin, to diversify their treasury exposure and make a decent profit that can help reduce their expenses.
As for the earnings number, the company posted solid numbers yesterday. The net profit for the quarter was 438 million dollars on a GAAP basis. It produced earnings of 93 cents per share vs. 79 cents per share. Revenue came in at $10.39 billion vs. $10.29 billion, or in simple terms, it was up a whopping 74% from a year ago. Tesla also recorded $518 million in revenue from sales of regulatory credit during Q1.
Despite these stellar numbers, the company’s stock price fell after hours yesterday, and the stock price is likely to be volatile today as well as traders will get a chance to react to the earnings report. The sell-off occurred because traders didn’t like the fact that there are real possibilities of supply chain disruptions due to Covid, and margins have also started to narrow. But overall, there is no doubt that Tesla has produced a stellar quarter, and it is highly likely that bargain hunters may use the opportunity to bag some more shares if they see a sell-off.
Europe’s largest lender by asset, HSBC, reported its own smashing quarterly earnings today. The pre-tax profit jumped 79% during the first quarter, and it was well above the market’s expectations. However, the revenue number was much smaller.
HSBC reported $5.8 billion of pre-tax profit during Q1, beating the estimate of $3.34 billion. The area of concern is that the bank hasn’t been able to pull that much revenue in, and it blames lower interest rates for that. The fact is that these lower interest rates are here to stay, and if the bank doesn’t have any policy to tackle them, it could be in for some trouble. That is because traders may forgive lower revenue numbers today as the bank has performed really well on the pre-tax profit number, but they are unlikely to turn a blind eye to this if this continues.
In the crypto space, we have a lot of optimism among investors and traders as they continue to see more naysayers folding their cards. JP Morgan’s massive announcement of offering Bitcoin’s actively managed fund to their wealthy clients has assured traders how wrong Wall Street banks were in criticising Bitcoin. These banks have no option but to offer digital assets to their client if they want to service them completely.
Overall, this particular news has brought a lot of enthusiasm among investors who took the recent sell-off as an opportunity to add more digital assets to their portfolios. Having said that, we aren’t fully out of the woods yet, and that is because the Bitcoin price needs to break above the next psychological resistance of 60K before traders can be certain that a move towards the 70K price is more likely.
Virus and Macro Climate
On the virus front, Gilead boosted its supply of Remdesivir to India as the situation continues to worsen there. The company will also help licensees expand their local manufacturing capacity, which is desperately needed. The US is going to export 60 million AstraZeneca vaccines once they have clearance from lawmakers. Concerns continue to mount how the exploding coronavirus cases and the rising death toll will influence India’s economy and its influence on the global economy.
Some positive news is also in focus among investors when it comes to Covid, and that is France will re-open its restaurants gradually between May and the end of June. There are also reports that the US may ease restrictions of wearing masks for those who are vaccinated.