Tesla shares were trading lower Tuesday despite the electric vehicle manufacturer reporting better-than-expected results for its fiscal year 2021 first quarter.

The tepid investor reaction to the earnings report may have to do with the fact that the company’s profits are more reliant on non-core activities than on selling cars.

Tesla’s Regulatory Credit Boost: Excluding zero emission vehicle, or ZEV, credits, Tesla’s auto gross margin was 22%, well below the peak level of 25.5% in the third quarter of 2018, Needham analyst Rajvindra Gill pointed out. ZEV credits contributed $518 million in the first quarter.

Bernstein analyst Toni Sacconaghi said Tesla’s auto margins have largely hovered between 20% and 22% for each of the last seven quarters.

Pre-tax income, excluding credits, has been consistently near breakeven despite volume and revenues doubling, he said.

Bitcoin Lifts Tesla’s Bottom Line: Tesla bought $1.5 billion of Bitcoin in the quarter and sold about 10% of the position, fetching it a profit of $101 million, Needham’s Gill said.

The company is looking at Bitcoin for liquidity and value storage purposes, as it believes the crypto offers a better alternative to traditional money market instruments, the analyst said.

The price of Bitcoin jumped about 104% in the first quarter to $58,918.83.

If not for the ZEV credit and the profits from the sale of Bitcoin, Tesla would have reported a GAAP loss of $181 million, he said. This is opposed to the $438 million in GAAP gross profit the company earned for the quarter.

Needham’s Gill has an underperform rating on Tesla shares.

TSLA Price Action: At last check, Tesla shares were down 2.64% to $718.68.

This story originally appeared on Benzinga. © 2021 Benzinga.com.

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