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File: tesla.png (117 KB, 895x385)
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TO CLARIFY - I AM BY NO MEANS SAYING THEY'RE UP TO ANYTHING, I JUST WANT SOME OPINIONS ON WHAT I'VE FOUND SO FAR.

Recently, I've been looking into earnings manipulation and how to detect it. Specifically, I've been reading up on Enron. Turns out, Enron was picked up years before it blew up by a couple MBA students doing a project. Among other redflags, was a metric call the Beneish model, which signals earnings manipulation. According to what I've been reading, Enron's score on this model signaled manipulation back in 1998.

>get curious
>start applying metric to top companies to see what I can dig up
>test all the big name tech companies (figure they'd be the ones most likely to be manipulators)
>Apple, Alphabet, Amazon, and Facebook check out
>Test out Tesla
>score is -0.42 (any score >-2.22 is said to be a likely manipulator) - link is at the end
>see their median score for past 10 years is -1.13
>Go into their 10K (link also provided at the end) and start reading through footnotes
>First thing I notice is pic related on page 61 that they recognize free services such as car charging and free internet access) as revenue
>price/sales is a popular tool for people analyzing pre-cashflow companies
>already seeing potential for problems
>go to expenses, notice they offset it in cost of goods sold
>offsetting expense accounts for about 8% of revenue so not too bad
>realize they seem to just be accounting for these expenses in one place though
>appears to be a wash even though it should be a net expense (I think)
>also a lot of shit going on with VIEs, sale-leasebacks and shit but I'm too caught up on this to get into it

What do you guys think? Am I missing something or have I just uncovered some shit the analysts are missing?

Beneish Model: https://www.gurufocus.com/term/mscore/NFLX/Beneish-M-Score/Netflix-Inc

Tesla 2016 10K: http://files.shareholder.com/downloads/ABEA-4CW8X0/5869828787x0xS1564590-17-3118/1318605/filing.pdf
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put the meth down John
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>>6417812
looks good, run with it. have a scoop on my desk monday morning.
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i didn't have to read any SEC filings to tell you that everything elon musk touches is a scam company
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>>6417812
everyone knows Tesla is the Tron of wallstreet
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>>6417975
Doubt I'll have anything that fast. Pretty swamped with other shit right now.

>>6418105
Kek. I had a feeling he was shady, but I really want to believe that he could get humanity to Mars
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>>6417812
Theyre expected to rev $100 billion over 20-50 years. A good long term hodl

Screencap this
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>>6418196
People with any common sense do. But that implies analysts have any common sense.

http://www.nasdaq.com/symbol/tsla/analyst-research
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>>6417812
did you use python?
whats the data source, googke finance?
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MOVE ALONG NOTHING TO SEE HERE
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>>6418280
Good question. Not sure where gurufocus got it from. I generally trust them though
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>>6418196
This is hilariously accurate
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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.
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>>6418280
According to the fine print, they get their fundamental data from Morningstar
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>>6418368
I think you're lost mate. >>>/pol/ is this way
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>>6417812
thanks just bought 100k
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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
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B-but he was gonna take us to Mars and bring us solar powered technology! He can do no wrong!
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>>6418407
when they say regulatory credits, do they mean Green Certificates?(i.e emissions reductions)
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>>6418368
>ICBMs
>this faggot doesn't know that it's aliens
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>>6418507
don't worry anon he already brought us solar power
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>>6417812

Saved this thread in case it's relevant at all in the future
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TSLA is a known scam in some financial circles
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>>6418509
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

>>6418490
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
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Model S selling for $70k defeats the whole purpose of the car. If you knew anything about electric motors, you'd know this.
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>>6418357
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
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>>6418655
gonna need a quick rundown on electric motors, anon
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>>6418633
As in overvalued? Well yeah. So are a lot of companies.

>>6418655
Explain please. Because I'm a finance major. I know absolutely nothing about electric motors

>>6418672
Disruptor =/ good accounting. Enron was a disruptor in energy as well
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>>6417812
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.
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>>6417812
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
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>>6418753
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!
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>>6418655
explain please
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>>6418803
He emphasized manipulation was possible. But his report focused more on how overvalued the stock/company was, which is obvious
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>>6418803

Could this thread be part of history? In if so
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>>6418741
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
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>>6418890
Those ivy league shmucks will be sucking our kneecaps anon
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>>6418864
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

>>6418899
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
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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
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>>6418826
And put myself at risk for nothing?

19cUxT1G3Y7u9TX85q4iNcqN52mdpj5c1p
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>>6419024
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
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>>6419164
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.
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>>6419024
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
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>>6419146
>put myself at risk
fuck off retard
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>>6419024
This. Cant wait for my 3 this year
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>>6417812
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...
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>>6418633
(according to whom?)

>>6418655
Top meme mate, take my (You)

>>6418724
You're a normie and you need to lurk moar.

>>6418826
You too.
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>>6419332
(You)
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>>6417812
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.
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>>6417812
So they are basically accruing for revenue they think they will have in 4 years?
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>>6419311
Good point anon. 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.

>>6419332
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
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Theres probably some kind of tax credit where they can count that stuff as revenue
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>>6419389
Thanks anon! that's one thing I was thinking actually. So can you explain a bit more about how multiple element works?
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>>6419389
Portion of the cash received from what? The sale of the car?
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>>6419686
I would assume that's what anon 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
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>>6419546
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.
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>>6419686
More or less, yes, it’ll be allocated out of the cash proceeds from the sale of the car.
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>>6420111
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)?
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>>6420010
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.
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>>6420184
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.
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>>6419146
SWIM was an exec at a battery company. They said lithium ion batteries are not the future and he's pushing bad tech.
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>>6420281
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
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>>6420315
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.
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>>6420381
Didn't mean was, and this company produces a massive amount of lithium ion batteries.
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>>6420381
Also I never said anything about electric.
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>>6418212

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

t. dude that worked on HiRise and Curiousity/CheMin
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>>6420420
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
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>>6420315
Exactly
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>>6420486
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.
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>>6420544
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
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>>6420625
Never said that. I'm not going to spoon feed you either.
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>>6420625

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.
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>>6417812

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.
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>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
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>>6420717
>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
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>>6420848
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... ;)
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>>6417812
errr.. the website you put up says it found errors with apple, Microsoft, and berkshire
At least 3 errors per. I sincerely doubt it.
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>>6420864
You seem like you've got it all figured out, good for you.
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>>6420913

Lol it's been coming soon for the last 20 years.
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>>6417812
this is the most /biz OP in 3 months
thank you
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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.




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