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1/ In a recent article, I argued that Tesla owed its Q3 profit entirely to regulatory credit sales. However, several bulls (and a few bears) pointed out that I neglected to factor in tax effects. So I wrote a follow-up doing just that. $TSLA $TSLAQ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems">https://seekingalpha.com/article/4...
2/ Reporting a $331M profit after $397M in credits sales, it appeared at first glance that Tesla had once again failed to make money selling cars (subtract credit sales from net income leaves -$66M). $TSLA $TSLAQ https://twitter.com/TESLAcharts/status/1319661868487761920">https://twitter.com/TESLAchar...
3/ Merely subtracting reg credit revenue from net income does not provide us with an accurate picture of Tesla’s core business profitability, the principal reason being that it doesn& #39;t account for the tax effects on net income. $TSLA $TSLAQ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems">https://seekingalpha.com/article/4...
4/ In Q3, Tesla reported a $186M provision for income tax. Adding that back to net income leaves earnings before taxes of $517M. Subtracting the $397 million in regulatory credit sales from EBT leaves us with $120M. Applying a uniform tax rate leaves us with $76.8M. $TSLA $TSLAQ
5/ Based on this analysis, it appears that Tesla did indeed manage to eke out a small net profit from operations. Yet, as has consistently been the case, reg credit sales were Tesla’s greatest profit driver in Q3, representing more than 3/4 of EBT. $TSLA $TSLAQ
6/ But wait, there& #39;s more! Tesla& #39;s penchant for accounting chicanery was again on full display in Q3, as @orthereaboot has been kind enough to lay out (as well as to offer reasonable doubt of the need to adjust for tax effect on credit sales). $TSLA $TSLAQ https://twitter.com/orthereaboot/status/1320719297858183173">https://twitter.com/orthereab...
7/ Then there is the issue of deferred revenue recognition. As @BradMunchen has observed, the 10-Q shows Tesla recognized $223M of deferred auto revenues from FSD. Strip out those 100% margin vaporware sales, and Tesla& #39;s Q3 turns red again! $TSLA $TSLAQ https://twitter.com/BradMunchen/status/1320727172844118017">https://twitter.com/BradMunch...
8/ Ultimately, whether or not Tesla had a small profit in Q3 is of little consequence. The core auto business& #39;s growth struggles continue, even with a second factory in full swing. @fly4dat has demonstrated this stagnancy to great effect. $TSLA $TSLAQ https://twitter.com/fly4dat/status/1319009591544451074">https://twitter.com/fly4dat/s...
9/ Things look even worse when we look at automotive revenue on a per-share basis. Years of dilutive stock offerings have spread revenues across more shares, leading to per-share revenue decline in the absence of credit sales. $TSLA $TSLAQ https://twitter.com/fly4dat/status/1319031874996547584">https://twitter.com/fly4dat/s...
10/ Without reg credit sales to plug holes and paper over its operational challenges, Tesla will struggle to maintain its exuberant growth narrative. $TSLA $TSLAQ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems">https://seekingalpha.com/article/4...
11/ Bulls often admonish skeptics to take a long-term view of Tesla, yet time does not appear to be working in Tesla’s favor. $TSLA $TSLAQ https://seekingalpha.com/article/4381646-tesla-q3-profit-conceals-underlying-problems">https://seekingalpha.com/article/4...
