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  • Tesla Motors hit by UBS downgrade  [View news story]

    "I cannot accept your insults. Garbage? Not only do you know yourself that FASB has updated GAAP rules that go into effect in 2017 which enables Tesla to recognise the asset backing its residuals rather than have to deal with it as a pro-forma write off of the entire residual value until years later the situation is proven otherwise. You were the one to tell us this."

    Yes, it is garbage. I never said Tesla would be able to recognize as current revenue the RVG liabilities once the new revenue recognition standard went into effect. That is overreaching. I said they "may be" able to. There is a huge difference between the two statements. Do you know what is required for them to be able to recognize the RVG liabilities as current revenue? There are qualifications that Tesla has to meet. I'm not sure Tesla will qualify for the standard. That is why I said "may be" able to. To say that they "will be" able to NOW, is garbage. Tesla says in their SEC reports that they don't know presently how the standard will impact them. You did read that in my post I hope, because it is there in black and white.

    I don't agree with your argument to exclude stock based compensation from expenses. It is a GAAP standard. Here is an article that explains it better than I:

    "If it was full of accountants instead, the economy would grind to a halt because there would be nobody producing anything of value to be accounted for"

    This reveals your disdain for following the standards. There are a multitude of companies that are run by former accountants (CPAs).
    Jul 23, 2015. 01:41 PM | 2 Likes Like |Link to Comment
  • Linn Energy A Contrarian Buy Opportunity  [View article]
    I'm gone from SA. Moderators can't see who are the trouble makers here. The hell with it.
    Jul 22, 2015. 08:42 PM | 1 Like Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth  [View article]

    I'll simply repeat what I just said:

    " What scares me is your and others blind allegiance to him. It tells me something is awry in Teslaland. You and others NEVER address the legitimate points I bring up, never acknowledge they are legitimate. You just tell me I got it wrong. No, I haven't."
    Jul 22, 2015. 08:34 PM | Likes Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth  [View article]
    No mike, I haven't got it wrong. What scares me is your and others blind allegiance to him. It tells me something is awry in Teslaland. You and others NEVER address the legitimate points I bring up, never acknowledge they are legitimate. You just tell me I got it wrong. No, I haven't.
    Jul 22, 2015. 08:12 PM | 1 Like Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth  [View article]

    That was a very intelligent reply. What really concerns me about Tesla is Musk himself. Violating boundaries of ethical behavior with accounting, as has clearly been exhibited by Musk, concerns me a lot. I'd hate to be the lead auditor in charge of auditing any of his companies. I can hear the berating of the auditors to go along with his line of thinking, no matter what the accounting standards are. A misstep with the accounting, especially since his CFO is leaving, and having to restate financials would be a very stupid mistake, IMO, costing shareholders.

    Along with this is the "cult" that seems to have pledged allegiance to Musk and that anything he does must be OK. I don't understand it. That scares the bejesus out of me. I realize that a lot of bears are overboard on some of their arguments, but some are legitimate, namely no profits yet, negative cash flow, and clear violations of accounting standards as evidenced by both the auditors and the SEC.

    On the bull side you have those who don't believe GAAP is relevant, whether it relates to the RVG or stock based compensation. Let me say this as clear as I can: GAAP will be around whether Tesla succeeds or fails. It is the accounting standard and will continue to be so because it adapts and changes as new financial transactions are created by business. It isn't perfect, but more so than some Teslarians think. Disregard it at your own peril. To be honest, I am picking up similar vibes as occurred with Enron. Skilling, Lay, and Enron could do no wrong. GAAP was criticized and mocked. Their downfall was the accounting. Eventually their misrepresentation of the numbers became obvious even to the analysts who were recommending the stock and setting stock price estimates.

    I have no investment in Tesla of any kind. I'd just like to see the articles on both sides be more objective.
    Jul 22, 2015. 07:21 PM | 1 Like Like |Link to Comment
  • Tesla Motors hit by UBS downgrade  [View news story]
    @ Cecil,

    Musk and Musk's CFO knew that they were emphasizing non-GAAP over GAAP before Weil's Bloomberg article and before the SEC told them to stop. I knew it. If I recognize something, you know it's pretty obvious.

    The point is that Musk is a cowboy, going by his own rules, thinking that the SEC and FASB should learn from him, and many of his followers/admirers, such as you, have the same mentality. It's shady accounting practices that will get him and his companies (plural) into deep doo doo.

    Why are you putting out this garbage about stock based compensation and Tesla being able to recognize revenue under GAAP in 2017 as it is with the non-GAAP now? Neither opinion is accurate.

    What I see reminds me of Enron before its demise.
    Jul 22, 2015. 06:17 PM | 5 Likes Like |Link to Comment
  • Tesla Motors hit by UBS downgrade  [View news story]

    "It is very important to note that the effect of non-cash stock based compensation is simply a minor but ongoing rate of shareholder dilution which replaces the need for the business to pay high value contributors out of its cash flows. "

    A company receives an asset, in the form of service, from an employee and you don't recognize the use of that asset (amortization of its cost) on the income statement? The company receives value from the employee's work, and the employee receives value from the company in the form of stock based compensation, and you don't recognize it as a cost to the company? Simply not credible.

    As for dilution, what the company receives for the stock purchase may be used to buy back shares, mitigating the share dilution.

    I'd suggest reading some to update your knowledge of the issues involved. It's not nearly as simple as you think. You can start with this:

    Please note that for 2014 and 1st Qtr 2015, Basic and Diluted EPS for Tesla are identical. (See the income statements for both periods) Counting stock based compensation as an expense had NO effect whatsoever on EPS. There was no "discounting for a second time".

    You put out some very bad misinformation, Cecil, on subjects you don't know enough about to be forming an opinion.
    Jul 22, 2015. 05:47 PM | 1 Like Like |Link to Comment
  • Tesla Motors hit by UBS downgrade  [View news story]

    "@Ken Sanders

    "Their operational cash flow [] is shockingly bad"

    Ken, I have heard that repeated but it simply is not true."

    OMG, man what are you doing?!?! Yes it is true. Look at the Cash Flow Statements in the SEC reports.

    1st Qtr. 2015, Operating Cash Flow is a negative $132 million, along with $432 million used in investing activities. Over half a billion of cash used.

    For 2014, $57 million negative operating cash flow and $1 billion used in investing activities. Over a billion of cash burn.
    Jul 22, 2015. 01:20 PM | 1 Like Like |Link to Comment
  • Tesla Motors hit by UBS downgrade  [View news story]

    "Racking up deferred profits under GAAP is not a loss, if you are a non-accountant you can just refer to the non-GAAP accounts where the the kind of reconciliation performed by GAAP accounting professionals when they reconcile these accounts with the real world is done for you.

    It will get easier to understand TSLA in future when the new and more transparent GAAP rules come into effect in 2017 so that GAAP accounts will more closely reflect Tesla's non-GAAP without arduous interpretation."

    You are presently calling potential liabilities "current revenue". That may or may not be true. We don't know yet what the reality will be. If the resale value holds up, then probably most of it will be "revenue". However, in Tesla's non-GAAP numbers they fail to accrue for any returns, which is not reasonable or credible. Tesla is getting returns on their Model S's as the SEC reports show. They are small and immaterial to date (about $9 million in 1st Qtr 2015) but nevertheless are not counted in the non-GAAP numbers, and should be.

    As for the new revenue recognition standard going into effect about Jan. 1, 2017, it's not clear if Tesla will be able to use it to record a portion of current deferred revenues as current revenues. Maybe, maybe not. You make it sound as if it's a done deal. Tesla, itself, states in its SEC reports that it doesn't know yet how the new standard will impact them. Here's what they say in the SEC 10-Q for 1st Qtr. 2015 (See "Recent Accounting Pronouncements, page 9):

    "In May 2014, the Financial Accounting Standards Board issued an accounting update which amends the existing accounting standards for revenue recognition. The new guidance provides a unified model to determine when and how revenue is recognized. Under the new model, revenue is recognized as goods or services are delivered in an amount that reflects the consideration we expect to collect. The guidance is effective for fiscal years beginning after December 15, 2016; early adoption is prohibited. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method and are currently evaluating the impact of adopting this guidance on our consolidated financial statements. "

    Cecil said: "It is important not to short this stock if you don't fully understand this key issue because on paper this makes all the difference between a recordd profit and loss without actually affecting the underlying business."

    Your statement is absolutely false. Stock based compensation is a much larger factor in the determination of Tesla's bottom line.

    Cecil said: "Where retail shorts have been caught at disadvantage considering the majority of the stock is held by large institutions, venture capitalist and insider that definitely have access to the ability to interpret GAAP correctly, these supposed losses are literally on paper only while the business is actually slightly profitable..."

    The analysts covering Tesla have largely disregarded stock based compensation, and assume the RVG liabilities are "phantom" or not real. In the first instance, they inappropriately disregard a legitimate expense. I will debate that with any or all of them. In the second instance, there is a risk those contingent liabilities could become actual ones. If Tesla stated in their SEC reports or shareholder newsletter what you have, the SEC would be all over them. You making untrue and unproven statements.
    Jul 22, 2015. 01:08 PM | 2 Likes Like |Link to Comment
  • Tesla Motors hit by UBS downgrade  [View news story]

    "You want to know how that works?

    Simple, because it is a $0.00 hedge to conclude that Musk does not want to hand over the keys to TSLA, SpaceX and Solar City in SEC violations and class action laws suits brought by shareholders, and lying to shareholders does not serve any useful purpose."

    Let's see how your statement works in reality.

    Have a look:

    Tesla falls under US accounting standards, whereas Porsche falls under international accounting standards, and the two are very different when it comes to calculating gross margin. You can't compare Tesla's to Porsche's without making some material adjustments, namely including in the calculation of Gross Margin for Tesla the amount of R&D that would be expensed under international standards or taking out the amount of R&D expensed in calculating Porsche's.

    The CFO just left Tesla.

    And you say Musk is not lying to shareholders. I'd say that is debatable. The reason is obvious: to goose revenues and the bottom line to make it look better than it really is.
    Jul 22, 2015. 11:45 AM | 3 Likes Like |Link to Comment
  • Tesla: Why The Smart Money Is Short  [View article]

    I stated, in a previous post some time ago, that the stock based compensation expense was a much larger factor in determining Net Income or Loss than the RVG was. I think the stock based compensation expense was about twice as much as the RVG contribution to Gross Margin, if I remember right. With the RVG, you have to take the revenue minus the cost of goods sold. That reduces its impact on Tesla's bottom line.
    Jul 22, 2015. 07:32 AM | 4 Likes Like |Link to Comment
  • Tesla: Why The Smart Money Is Short  [View article]

    Does Musk add value to Tesla and create future cash flow for the company? IF yes, then non-GAAP overlooks his contribution to future cash flows by not counting his compensation as an expense. In this instance, measuring expenses by cash only (non-GAAP according to Tesla) fails to count all costs incurred (value exchanged) in generating future revenues (cash flows). GAAP includes this value (cost). GAAP has it right.
    Jul 22, 2015. 07:21 AM | 5 Likes Like |Link to Comment
  • Tesla: Why The Smart Money Is Short  [View article]

    So, debunk stock based compensation as a legitimate expense. I challenge you to try. Give us something other than just an unsubstantiated opinion.
    Jul 22, 2015. 07:12 AM | 8 Likes Like |Link to Comment
  • Tesla: Why The Smart Money Is Short  [View article]

    Stock based compensation is a legitimate expense, improperly left out of non-GAAP crap accounting. The compensation has value, whether paid in cash or not. Cash basis (only) accounting is not a valid way to measure profitability and has been rejected by FASB because accrual based accounting has been PROVEN to be a better predictor of future cash flows.

    Mr. Musk doesn't work for free. He is paid compensation via stock and/or options. He is largely what gives Tesla value. So, he largely drives the potential future cash flows of the company. Hence, using only cash based measurements of value, which non-GAAP does, overlooks this driver of future cash flows. GAAP does not overlook it. Your knowledge in this area is lacking.

    GAAP maybe too conservative in recognizing the revenues from the RVG, and I emphasize "maybe", because we don't know yet what the resale value is going to be when the RVG becomes operative. However, with an unproven company with no profits and no positive cash flow, it is wise to recognize revenues only when they are "earned", that is when Tesla has fulfilled essentially all its responsibilities that give it the legal right to the money. That has not yet occurred. Also, Tesla, in its non-GAAP crap accounting, fails to accrue for any returns, which is not credible.

    Your statement of Tesla being "well in the black" are factually wrong. You fail to recognize facts and keep putting out untruths in regard to the non-GAAP crap accounting.
    Jul 22, 2015. 07:02 AM | 12 Likes Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth  [View article]

    In regards to dissing proven companies, I was referring to Sidarth, his post here:

    " "These all pay a nice dividend because they are PROFITABLE, unlike Telsa." - Being profitable today is no reason to invest in a company. How profitable it will be tomorrow is. "

    Totally disregarding the proven track records of "O", and "OHI", "JNJ", etc. That to me is totally illogical.

    " All I ask is that that concept is not confused with the company being bad in any way like Cparm does when she equates it with illegality and unethical behavior. "

    When I say gamble, I am referring to future profitability.

    But, Tesla has had problems with its accounting, and still does by still emphasizing non-GAAP over GAAP. It could be, and I emphasize "could be", that GAAP is too conservative in recognizing revenue on the resale value guarantee. But we don't know that yet, and Tesla is a new company in regards to ramping up production and the resale value of its vehicles. Caution is warranted in recognizing revenues. There is no proven track record yet as to the company or resale values.

    But, in regards to non-GAAP, deducting legitimate expenses, like stock based compensation, is simply NOT CREDIBLE. Let me repeat, NOT CREDIBLE. Value is being traded for value, Tesla is receiving value from Mr. Musk's management expertise, and Mr. Musk is receiving value in the stock compensation, some of which has already vested. He can sell that for CASH. So, Value is being traded for Value. The company is paying their CEO compensation. A CEO doesn't work for free. It is a legitimate business expense, and it can be measured. Yet, Tesla takes this out of their non-GAAP financial numbers, even though GAAP clearly requires it. NOT CREDIBLE.

    So, wall street analysts, and anyone else, can take this out of their calculations of so called "non-GAAP Net Income", but it doesn't fly or pass the smell test.

    That combined with the previous problems outlined in Jonathan Weil's Bloomberg article and the SEC letter make me wonder just what the hell is going on at Tesla. And I do entertain the possibility that the CFO leaving was in connection with all of this "nonsense".

    Combine that with Must comparing Tesla's Gross Margin to Porsche's, when the two are not comparable (because of different accounting standards) and saying Tesla will reach the market cap of Apple, and I just have to scratch my head and think, "what the hell?". Yes, I consider an investment in Tesla is very risky.

    To Sidarth: In your response to my mentioning the CFO leaving Tesla, you posted a link to an article showing the CFO of Google was leaving, as if that were comparable to Tesla's CFO leaving. Is it? Has Google done any of what Tesla has done in regards to "shady" accounting practices? IF the answer is "no", then the two are not comparable.

    As long as people continue to "hype" Tesla, diss well proven companies, as well as GAAP accounting standards, and overlook the obvious, I remain very, very skeptical of the company, for obvious reasons.
    Jul 22, 2015. 04:47 AM | Likes Like |Link to Comment