Tesla Accounting Question

Good question. Not sure where gurufocus got it from. I generally trust them though

This is hilariously accurate

Since TSLA is a private corporation, they are not subject to Freedom of Information Act requests by American citizens. This allows them to run secretly under control of the CIA to hide funds being used by SpaceX to give North Korea ICBM technology.

According to the fine print, they get their fundamental data from Morningstar

I think you're lost mate. is this way

thanks just bought 100k

Not bad bumping for interest. I love Musk because he's an anarcho-transhumanist but I wouldn't be surprised if he does shady shit like this to make his companies' stock more profitable

B-but he was gonna take us to Mars and bring us solar powered technology! He can do no wrong!

when they say regulatory credits, do they mean Green Certificates?(i.e emissions reductions)

>ICBMs
>this faggot doesn't know that it's aliens

don't worry user he already brought us solar power

Saved this thread in case it's relevant at all in the future

TSLA is a known scam in some financial circles

Possibly. I believe it's credits companies are allowed to deduct from their vehicles emissions in order to stay compliant with standards and not get penalized. I'm pretty sure it's common place for companies with extra credits (because their vehicles pollute less than the standard) to sell them to other companies

I know. I want to believe in what he's doing too. But I also can't people who defraud investors and would love the personal glory of uncovering something like that

Model S selling for $70k defeats the whole purpose of the car. If you knew anything about electric motors, you'd know this.

Its far from accurate. Tesla is a legitimate disruptor, open sourced a lot of their work, and has been actively ANTImarketing their Model 3 due to production constraints

gonna need a quick rundown on electric motors, user

As in overvalued? Well yeah. So are a lot of companies.

Explain please. Because I'm a finance major. I know absolutely nothing about electric motors

Disruptor =/ good accounting. Enron was a disruptor in energy as well

Any legitimate investor or economist worth their salt knows Tesla is a ticking time bomb, the problem is Elon's cult is so unfathomably deluded that no one knows when his followers will realize his company is worth jack shit, because they buy the stock based on the Elon name, not the financials. People expected it to implode when it became clear the Model 3 was a piece if shit car that would never meet delivery targets, and yet the price went up 30$ TD.

OP my friend is working on his MBA, and he had similar comments. He didn't spill the technical details to me, but he mentioned possible manipulation among other things

I'm happy I'm not the only one who's seeing this shit then. I suspect there's more that I haven't seen yet.

You know what they say about seeing a roach!

explain please

He emphasized manipulation was possible. But his report focused more on how overvalued the stock/company was, which is obvious

Could this thread be part of history? In if so

This thread alone is swamped with Tesla fanboys who drink his coolaide. As long as the name behind the brand stays, they'll be fine

Those ivy league shmucks will be sucking our kneecaps user

Yeah. I've been calling overvaluation for a while too. I just thought that someone on the street would have learned to read the fucking footnotes by now

Yeah. The stock will be fine for a bit. They have a paywall coming up in 2020 I believe (too lazy to check when). They have something like $3 Billion in debt coming due that year, which is about half the company's assets

Tesla aren’t going anywhere, I own 2 and they are the best cars I’ve ever driven, it’s just that most people can’t afford them. As soon as people get into Model 3’s and experience the difference at an affordable price it’s GG to the other manufacturers

And put myself at risk for nothing?

19cUxT1G3Y7u9TX85q4iNcqN52mdpj5c1p

Very funny, you say that as if you've driven many other cars before, which you haven't, you also don't own a Model 3 for sure, because no one who owns a Model 3 would unironically find it any better than any other car at the same price point

You should see the reviews on youtube for the Model 3. It stomps the 3 series, A4, and C series, not to even mention the Bolt and Volt.

There's a difference between the product and the books. I agree the cars are cool (don't own won because I'm in college) but if they're fucking with their books it's a huge redflag for the company's health

>put myself at risk
fuck off retard

This. Cant wait for my 3 this year

I'd be interested in how you could apply this to healthcare. If you want to know the next bubble to pop it's healthcard since it's now viewed as such an essential service. Get ready for the next industry to be labeled as to big to fail...

(according to whom?)

Top meme mate, take my (You)

You're a normie and you need to lurk moar.

You too.

(You)

Chartered Accountant here. Just because something is free to a consumer doesn’t mean that zero revenue is recognised for it. The argument is that someone buying a Tesla doesn’t just buy a car - they buy access to the supercharger network, etc, and therefore a portion of the cash received should be considered to arise due to that product, and therefore revenue is recognised. Read up a little more on multiple element accounting rules for more info.

So they are basically accruing for revenue they think they will have in 4 years?

Good point user. I'd be interested too. What I might do is go back and retrospectively look at something like Valeant and see if it would have picked up on it.

Not a normie. This just isn't my usual board. I come here when I want to talk finance but I do enough of that during class

Theres probably some kind of tax credit where they can count that stuff as revenue

Thanks user! that's one thing I was thinking actually. So can you explain a bit more about how multiple element works?

Portion of the cash received from what? The sale of the car?

I would assume that's what user was referring to. My problem with that it is it still feels like manipulation (not necessarily illegal) as it makes revenue look better in that year than it actually was.

Then you run into the issue with pre-cashflow companies like Tesla that investors value it based on revenue so if revenue's higher due to technicalities like that, you're making it appear the company is doing more in sales than it is

Generally, if a delivered item has ‘standalone value’ to a consumer, then it needs to be accounted for separately. The access to the supercharger network would be considered to have standalone value (even if a consumer doesn’t specifically pay for it), and therefore will need to be considered when recognising revenue.

How that revenenue is split from the sale of the car itself is where it gets complex - I have no idea how Tesla would do it and I suspect you wouldn’t be able to find out through the statutory accounts. Assumedly the auditor has signed it off though, but we all know how that turned out with Enron.

If you want to know more, there’s a tonne of material out there. It will help you develop your financial analysis skills. Google it, I’m sure the Big 4 firms each have some guidance on if.

More or less, yes, it’ll be allocated out of the cash proceeds from the sale of the car.

That's interesting. Why doesn't gap require that to be made clear in the income statement? Shouldn't something like that deserve it's own line item (or at least a schedule in the footnotes)?

Technically this arrangement would actually decrease revenue in the current period (ie push revenue to later periods), as a portion of the cash received will be considered attributable to the supercharger network, which is recognised over a period of years. This revenue will get deferred (pushed onto the balance sheet as deferred revenue). If anything, OP’s original post is actually pointing out conservatism in Tesla’s accounting policies.

Because then annual reports would be 500+ pages. They’re trying to balance readability / usability for the layman whilst at the same time being informative.

SWIM was an exec at a battery company. They said lithium ion batteries are not the future and he's pushing bad tech.

I'm not suggesting anything major, just a quick couple lines to summarize what portion of the revenue being recognized was from car sales and what portion is from the free services

What, an exec in the early 2000s when the tech was shit? Electric cars are the future, hydrogen and other meme fuels will go extinct, including gasoline.

Didn't mean was, and this company produces a massive amount of lithium ion batteries.

Also I never said anything about electric.

Going to Mars is fuckijg pointless. Go back to the moon, if anything.

t. dude that worked on HiRise and Curiousity/CheMin

So what does he think is the future for electric batteries then? Also, something tells me the Gigafactory is miles beyond in tech improvement than the others. Musk is no brainlet, no matter how many may dislike him

Exactly

I'm not going to say much more, and I am only being specific to batteries. His gigafactory is not impressive or innovative. If you worked in the industry or were an electrical engineer you would know why.

So you believe there is new tech to come out that will eventually replace li ion batteries? Even so, nothings stopping them from shifting when ready. Battery swaps on Teslas are no problem

Never said that. I'm not going to spoon feed you either.

How about regular old energy dense and transportable chemical fuel? Solar/wind/hydro/etc are inferior to nuclear, require too much upkeep and costly resource extraction. Energy from Th/U and closed cycle chemical energy from high temp atmospheric extraction. Forget the meme technology; use the suoerior/proven technology.

I am a chartered accountant for IFRS, so not American GAAP. I am not really used to American statements, (they are fucking convoluted aye…and also not as transparent as IFRS. For example “Services and other” is not really defined. I am assuming this all falls under the category of “Automotive Revenue”.)
I didn't really read into the Bene stuff, but I don't understand why you think this is a wash? I don’t really understand what it is you think you found as well. Do you think they are over reporting revenue? Under reporting revenue?
For clarity the colloquial definition of “Wash” I know is that you TAKE the hit when you wash something. As in "New CEO comes in: Fuck all our IPs are shit, write all that shit down this year, so next year we have a brilliant year and also next year is when it counts to my bonus anyway". So if you think it’s coming up net profit whilst you are expecting net expense, this is the very opposite of a wash.
The revenue treatment seems pretty standard in "bundled goods". I am not in consumer goods, but if you are really serious and want to compare maybe look at another company that primary sells a product first with aftermarket support / services. Telecommunications comes to mind, but it might fuck up your analysis because the smaller component of this bundle is the physical good. The opposite is true for Tesla. I would say appliances companies, but their relationship is more of a “warranty” on their goods…so if you can think up of something else similar maybe you can compare the two.

>cont:

What they are doing with revenue seems pretty standard. In regards to the definition of automotive revenue IF the auditors were worth their salt, the wording of the definition actually means something.

This is PWC, so I am pretty confident they would have insisted that the items that make up automotive revenue, as described on page 61, is in decreasing significance.

For example, the way the sentence is constructed, Car sales is largest, followed by sales of regulatory credits and finally the bundled shit and services.

Very generally, the bundled revenue would be calculated as part of the car sales price / package and deferred.

So if Tesla with all services is $70k and they value the services as $5k then they defer the $5k and recognize that over the lifetime of the car (8 years, 4 years for internet).

There is a note further down that shows how much they deferred in 2016 and 2015

>cryptic and salty because friend is in the lio ion business and Tesla demand increased lithium price

I just googled it and apparently lithium sulfur will be a thing. Interesting assuming it wont make any odor around or in the car. Though the miles per charge are already high enough for most if not all

Lol, IFRS is a principles-based meme. GAAP is much more detailed and legit, and its why studying for IFRS seems like kindergarten in comparison. Hope yall are ready for that convergence project... coming soon... ;)

errr.. the website you put up says it found errors with apple, Microsoft, and berkshire
At least 3 errors per. I sincerely doubt it.

You seem like you've got it all figured out, good for you.

Lol it's been coming soon for the last 20 years.

this is the most /biz OP in 3 months
thank you

I'm going to buy 20.000 options on Tesla first thing monday morning. This better work out OP or you're in a lot of trouble.