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Tesla Cash On Hand, Free Cash Flow, And Bitcoin Holdings

Tesla Gigafactory Shanghai. Source: Tesla Q3 2019 Update Letter

Cash is the lifeline of a business.

For this reason, Tesla’s (NASDAQ:TSLA) cash flow has always been a hot topic, not just among investors but also creditors.

Most parties are eager to find out about Tesla’s cash position, and they want to know if the company has enough liquidity to operate its businesses.

For your information, Tesla has been not only profitable but also cash flow positive.

As a result, Tesla’s cash on hand has been massively expanding in recent years.

Before we begin, Tesla’s cash on hand, cash reserves, or cash positions presented in this article are meant the same and used interchangeably.

In the following discussion, we will look into Tesla’s cash position and analyze the respective cash reserves over some time to see how the numbers have changed.

In addition, we also will take a look at the operating cash flow and the respective cash margins.

Also, we will compare Tesla’s cash position with free cash flow to see how the 2 cash metrics correlate with each other.

Finally, we also explore Tesla’s net cash from financing activities to see what the company does with the cash.

That said, let’s start with the following topics.

Table Of Contents

Consolidated Results

A1. Cash On Hand

Digital Assets

B1. Bitcoin
B2. Cash On Hand + Bitcoin

Cash Flow

C1. Operating Cash Flow
C2. Free Cash Flow

Cash Flow Margin

C3. Operating Cash Flow Margin
C4. Free Cash Flow Margin

Cash Flow Correlation

D1. Cash Position Vs Free Cash Flow

Cash From Debt Borrowing And For Repayment

E1. Net Cash From Financing Activities

Conclusion And Reference

S1. Conclusion
S2. References and Credits
S3. Disclosure

Cash On Hand

Tesla's cash on hand

Tesla’s cash on hand

(click image to expand)

* Cash on hand consists of cash & cash equivalents, restricted cash, and short-term investments.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Tesla’s cash on hand has massively expanded in recent years and totaled slightly over $23 billion as of 2Q 2023.

Of this amount, roughly $15 billion came from cash and cash equivalents while short-term investment contributed $8 billion.

For your information, Tesla runs a capital-intensive operation and requires tonnes of cash for working capital.

As Tesla grows, it makes sense for the company to expand its working capital and thus, the cash position.

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Bitcoin

tesla-bitcoin-holdings

tesla-bitcoin-holdings

(click image to expand)

* Bitcoin fair market value data was obtained from Tesla’s quarterly filings.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Aside from cold hard cash, Tesla also holds digital assets such as bitcoin.

However, from the perspective of accounting, digital assets are not recognized as cash in the balance sheets and therefore, they are not considered as current assets.

Instead, digital assets are recognized as indefinite-lived intangible assets or simply digital assets under the non-current assets category.

That said, Tesla bought $1.5 billion worth of Bitcoin in 2021 according to the following statements.

Here is an excerpt extracted from the 2022 annual report regarding Tesla’s investment in Bitcoin .

Tesla Investments in Bitcoin
During the years ended December 31, 2022, and 2021, we purchased and/or received an immaterial amount and $1.50 billion, respectively, of digital assets.

As of December 31, 2022, we have converted approximately 75% of our purchases into fiat currency.

As of December 31, 2022, and 2021, the carrying value of our digital assets held was $184 million and $1.26 billion, which reflects cumulative impairments of $204 million and $101 million, in each period, respectively.

The fair market value of such digital assets held as of December 31, 2022 and 2021 was $191 million and $1.99 billion, respectively.

As of Dec 31, 2022, Tesla’s bitcoin carrying value was only $184 million and this amount remained the same as of the end of 2Q 2023.

Despite the relatively low carrying value, the fair market value was $351 million as of the end of 2Q 2023 as shown in the plot above.

For your information, the fair market value is the value you get when you liquidate your investment.

The abrupt decrease in the fair market value of Tesla’s Bitcoin shown in the chart above is due to the liquidation of the digital assets.

Therefore, as of the end of 2Q 2023, Tesla still held roughly $351 million worth of Bitcoin.

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Cash On Hand + Bitcoin

tesla-cash-on-hand-and-bitcoin

tesla-cash-on-hand-and-bitcoin

(click image to expand)

* Bitcoin fair market value data was obtained from Tesla’s quarterly filings.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

If you take into account the Bitcoin fair market value, Tesla’s total cash on hand may end up totaling nearly $24 billion ($23.4 billion + $0.351 billion) as of the end of 2Q 2023.

This amount was a rise of more than 20% from the same quarter a year ago.

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Operating Cash Flow

Tesla's operating cash flow

Tesla’s operating cash flow

(click image to expand)

* Net cash from operations is presented on a TTM basis in the chart above.
* TTM figures are calculated based on the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

A discussion of cash flow without including net cash from operations is deemed incomplete.

As such, I included a chart above to depict Tesla’s net cash from operations.

As seen, Tesla’s net cash from operations has been on the rise and soared remarkably since fiscal 2021.

Over the past 4 quarters, Tesla’s net cash from operations averaged $14.5 billion on a TTM basis, and the latest figure came in at $14 billion, also a record figure since 2021.

In short, Tesla is printing cash.

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Free Cash Flow

Tesla's free cash flow

Tesla’s free cash flow

(click image to expand)

* Free cash flow consists of net cash from operating activities less capital expenditures and is presented on a TTM basis in the chart above.
* TTM figures are presented based on the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

In general, free cash flow is derived from the following equation:

Free cash flow = net cash from operations – capital expenditures

After accounting for capital expenditures, Tesla has an incredible run of free cash flow and the figures have been mostly positive in recent quarters, indicating that cash has been flowing in instead of flowing out.

As of 2Q 2023, Tesla’s free cash flow totaled $6.2 billion and was slightly lower compared to the same quarter a year ago.

In short, Tesla generates strong free cash flow and is a cash cow.

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Operating Cash Flow Margin

Tesla's operating cash flow margin

Tesla’s operating cash flow margin

(click image to expand)

* Operating cash flow margin consists of the ratio of Tesla’s TTM operating cash flow to TTM revenue.
* TTM figures are presented based on the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Tesla’s operating cash flow margin has significantly declined in recent quarters compared to a year ago.

As of 2Q 2023, Tesla’s operating cash flow margin totaled 15%, down considerably from a year ago but was still an impressive figure by all measures.

At this ratio, Tesla’s operating cash flow result is comparable to and even exceeds that of General Motors as shown in this article – General Motors Operating Cash Flow.

At a margin of 15%, Tesla was capable of converting 1 dollar of sales to 0.15 dollars of net cash from operations.

In short, Tesla is a cash cow that knows how to print cash.

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Free Cash Flow Margin

Tesla's free cash flow margin

Tesla’s free cash flow margin

(click image to expand)

* Free cash flow margin consists of the ratio of Tesla’s TTM free cash flow to TTM revenue.
* TTM figures are presented based on the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Similarly, Tesla’s free cash flow margin also has significantly declined in recent quarters compared to a year ago.

As of 2Q 2023, Tesla’s free cash flow margin clocked nearly 7%, down considerably from the same quarter a year ago but still exhibited an impressive result.

In short, Tesla converted 1.00 dollars of sales to about 0.07 dollars of free cash flow at a margin of 7%.

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Cash On Hand Vs Free Cash Flow

Tesla's cash on hand vs free cash flow

Tesla’s cash on hand vs free cash flow

(click image to expand)

* Cash on hand and free cash flow data presented in the chart above came from the prior figures computed earlier by the author.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Tesla’s cash on hand correlates closely with free cash flow.

As shown in the chart, Tesla’s positive free cash flow tends to grow its cash on hand.

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Net Cash From Financing Activities

Tesla's net cash from financing activities

Tesla’s net cash from financing activities

(click image to expand)

* Net cash from financing activities is presented on a TTM basis.
* TTM figures are presented in the chart above based on the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

The net cash from financing activities depicts whether cash is used for debt repayment (negative numbers) or cash is added from debt borrowings (positive numbers).

As shown in the chart above, Tesla’s net cash from financing activities has been mostly negative in recent quarters, implying that the company has been paying down debt.

Tesla’s historic debt repayment in recent years has significantly reduced its total debt and this practice bodes well for shareholders.

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Conclusion

Tesla carries a significant amount of cash.

Apart from that, Tesla also has positive cash flow from operations and produces tonnes of free cash flow.

In short, Tesla is a cash cow and knows how to print cash.

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References and Credits

1. All financial figures presented in this article were obtained and referenced from the company’s SEC filings, earnings releases, investors presentations, update letters, quarterly and annual reports, etc., which are available in Tesla Press Releases.

2. Featured images in this article are used under a Creative Commons license and sourced from the following websites: Marco Verch.

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Disclosure

References and examples such as tables, charts, and diagrams are constantly reviewed to avoid errors, but we cannot warrant the full correctness of all content.

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

If you find the information in this article helpful, please consider sharing it on social media and also provide a link back to this article from any website so that more articles like this one can be created in the future.

Thank you!

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{ 1 comment… add one }
  • Dan Neale July 14, 2021, 10:23 pm

    Very helpful.

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