Check out how Tesla makes money! Where does Elon Musk's wealth come from?

Tesla has released its 2022 full-year financial report. Apart from the curiosity in the crypto community about Tesla's holdings in Bitcoin, what other interesting things should we pay attention to?

Bitcoin Holdings and Profit/Loss Status

Tesla bought 48,000 bitcoins in 2021 and sold 4,800 bitcoins in the first quarter of 2021 and 32,400 bitcoins in the second quarter of 2022. The realized profit/loss on the sale of bitcoins in 2022 was $64 million, and the unrealized profit/loss was -$204 million. As of the end of 2022, Tesla still holds 10,800 bitcoins with a book value of $184 million.

In the second quarter of last year, Tesla sold 32,400 bitcoins to hold more cash to cope with future market uncertainties.

The cost of the sales was lower than the cost of buying in 2021, but a realized profit/loss of $64 million was recognized. This is merely an accounting treatment and does not reflect the actual profit/loss of the transactions. Financial instruments need to be revalued based on market prices monthly/quarterly/annually, which will also affect the carrying value seen on our financial statements, leading to different calculation bases.

However, considering Tesla's total assets of $82.3 billion, the market value of bitcoins, which is less than $200 million, is indeed insignificant, and it is believed that their holding is merely symbolic.

Annual Profits Always Met

In addition to achieving good financial figures, Tesla has become a tech company with gradually stable and growing profits. In the financial statements, we also see the high standards set by CEO and Technical Director Elon Musk and the generous stock option rewards after meeting these standards.

Since 2018, Musk has not received a fixed salary but has received rewards in the form of performance bonuses and dividends each time he achieves the phased achievements set by the company. After meeting the standards, Musk can purchase Tesla stock at a price of $23.34 per share, but with a 5-year lock-up period.

According to CNBC's website, Musk currently holds 14.7% of Tesla stock, valued at $132.4 billion.

The Halo Effect is Too Prominent

The issue of Musk's high profile in the media also faithfully appears in Tesla's financial statements, which state:

We overly rely on CEO Elon Musk. Although Musk has been working at Tesla for a long time and has been very active in the company's management, he has not devoted all his time and attention to Tesla.

The problem of Musk personally pledging Tesla stock for loans also became a focus at the end of last year. Especially when the stock price fell sharply, Musk may be forced by banking institutions to sell Tesla common stock to fulfill his loan obligations, leading to a downward spiral in stock prices.

However, in the financial statements, we can see that Tesla's gross margin and net profit margin have been increasing year by year. The financial statements also proudly display the comparison of the total cumulative return rates of Tesla stock, the Nasdaq index, and stocks of similar companies in the automotive industry from January 1, 2018, to December 31, 2022, after investing $100 and reinvesting dividends. Although Tesla has never paid dividends and does not plan to in the future, its investment return rate, especially after a recent significant drop in stock price, has left competitors far behind!