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interesting timing...considering there’s a lot of scrutiny from whistleblowers and short sellers around scrap inventory on Tesla’s balance sheet and Tesla’s rea
by xoxoy 6y ago
interesting timing...considering there’s a lot of scrutiny from whistleblowers and short sellers around scrap inventory on Tesla’s balance sheet and Tesla’s real relationship with this company.
will need to dig around but recall seeing a screenshot of either an analyst call or archived page that suggested someone let it slip this was a Tesla subsidiary and not a completely unrelated entity.
- ianai 6y agoUh why does that matter?
- xoxoy 6y agothe whistleblower Marty Tripp alleged that as Tesla ramped up Model 3 production their battery production facility was creating hundreds of millions in wasted battery product. Scrap inventory has a severely depreciated value - the emails that have surfaced suggest they may have tried to hide it under “Work in Progress” where they could value it fully. If they actually wrote down $100M+ in battery inventory that would be a massive shock - no investor is considering that level of scrap in valuing the company right now. If they have a secret subsidiary they could sell it to this entity at some bloated price without anyone knowing. This company then becomes some highly indebted entity that will probably eventually go bankrupt but save Tesla’s valuation.
- baybal2 6y agoWould it change the fact they will still be 100x times overvalued?
- xoxoy 6y agothe valuation could go in a second if there’s a hint of running low on liquidity - or that either assets appear bloated or liabilities understated also it’s the clearest sign of accounting fraud...but apparently the SEC doesn’t care to investigate that anymore.
- bob33212 6y agoThat is a reasonable concern from an accountant point of view. But time and time again Elon has shown that he isn't operating with the normal MBA CEO mindset. He is operating as an engineer, and all that matters in the engineering world is that if you can successfully build the technology and factories to remake these packs at a low cost, your total costs will be significantly lower than your competition. It doesn't take an MBA to understand the implications of that.
- xoxoy 6y agoif this is indeed a Tesla subsidiary, it’s accounting fraud
- recuter 6y agoHow could it possibly be? Tesla had $100M+ of scrap inventory they pretended was still good and then somehow created a subsidiary out of thin air and "sold" the scrap to it? I don't understand where the $100M the subsidiary paid materialised from. How is any of this possible. What's preventing others from having secret fake subsidiaries and printing money out of nowhere?
- maxerickson 6y agoFunding such a fraud could make sense for holders of large amounts of Tesla stock. Spend $100 million to prop up billions. Note that I'm commenting in the abstract, not commenting in support of fraud as an explanation. I have no information or opinion about this battery recycling company.
- xoxoy 6y agoI mean it’s hardly a secret if it’s on the cover of WSJ. The question is who funded this company and what transactions have they made with Tesla? but obviously no one will tell you those two things.
- pbhjpbhj 6y agoHow about M invests $100M in company B, he writes them a cheque, company B purchase waste from company C for $100M, by cheque. Company C loan M the money, by cheque, or give him it. M isn't out any money. B has a lot of waste to process, batteries maybe. C has $100M extra on their balance sheet. There'd be some wastage: capital gains taxes, ancillary costs. Does that kind of thing work?
- sukilot 6y agoHow is that legal? (Besides the boring answer of the fundamental corruption in the concept of the corporation.) I can't outsource all my debts to a zero-net-worth friend who then declares bankruptcy.
- xoxoy 6y agoit’s not
- deleted 6y ago[deleted]
- AndrewBissell 6y ago"How is that legal?" is never really a relevant question when it comes to Tesla or Elon Musk.
- omgwtfbyobbq 6y agoWriting down $100M+ in battery inventory would be a big hit, especially with their profit margins being thin, but I wouldn't consider it a big shock. At $20000 per pack, $100M+ in battery inventory is 5000+ cars, which is less than a percent of total production so far. Having a significant number of defects early in the production process is common. Ultimately, it's up to them how to value it, within reason and the law, just like it's up to them when to sell emissions credits.
- baggachipz 6y agoIt doesn't; they're an anti-tesla shitposter[1] who tries to foment FUD at any opportunity. The company's not perfect and possibly over-valued, but they take any chance to attempt to sow negativity about them. [1] https://news.ycombinator.com/item?id=23921487 https://news.ycombinator.com/item?id=23921487