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A long running problem with Tesla. Their accounting has always smelled, and this has only gotten worse with every passing quarter.

• edmundsauto 6y ago
  I'm not much of a financial guy, could you spell out the specifics in their accounting that smell? And whether this is a standard practice?
  • Hypx 6y ago
    A large number of "this doesn't quite add up" type of problems, as well as quarter to quarter inconsistencies. For instance, accounts receivables goes up basically every quarter, but the reason for it always changes. People suspect large-scale fleet sales are being hidden in this term. Plus their general dishonesty in how they are presenting numbers. They're greatly downplaying how all profits are coming from credit sales, and use an unusual definitions of "gross margin" which doesn't include R&D and sales related costs.
    • edmundsauto 6y ago
      Is it dishonesty in the sense of “this is not an accepted accounting practice”? Or is it more “I don’t think this should be acceptable as an accounting practice”? Genuinely curious, not much of a finance person.
      • Hypx 6y ago
        The central point of proper accounting is that it prevents frauds, scams, Ponzi schemes, or other nonsensical companies from existing. Companies that feel free to abandon those principles are inviting the possibility of becoming one of those kinds of companies. In other words, it's a purely utilitarian argument. If Tesla is abandoning basic honesty in its accounting, then it's likely that there will come a day where, almost out of nowhere, the company collapses. We saw this with Wirecard recently, so this is not a unrealistic claim. This is arguably the worse possible outcome of an investment. My own views are very much secondary to what could happen if this continues. You should view this problem entire on the premise of what the real-world risks are, and how it could affect investors.