SEC calls out Tesla for "cooking the books" on earnings

2383 Views 3 Replies 4 Participants Last post by DonC, Dec 1, 2016

bro1999

Discussion Starter · Nov 30, 2016

http://fortune.com/2016/11/30/sec-tesla-earnings-cooking-the-books-resale/

Don't think this is really news to anyone that even loosely follows Tesla/TSLA.

Basically, Tesla never considered that the value of leased Teslas could actually be worth less than their residual values once they came off lease. Tesla's non-GAAP reporting always assumed leased Teslas would be worth at least as much as their residuals.

Tesla said it “will revise its disclosures in future earnings releases to remove any presentation of non-GAAP measures that adds back the deferred revenue and related costs for cars sold with resale value guarantees and where the Company collected the purchase price in cash"

Gotta do what it takes to keep that stock price up!

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kns

· #2 · Nov 30, 2016

From the Fortune article, "Tesla’s non-GAAP figures though, effectively ignored the possibility that its used cars could be sold for less than it predicted, even three years down the road." Since Tesla had guaranteed the banks that if they had to unload a leased car at the end of the lease for less than a guaranteed residual value that Tesla would make up the difference, this is a significant unreported liability. And what might reduce those residual values? How about poor reliability? Or new EV models? Like the Bolt EV, the TM3 and others in the pipeline.

KNS

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