Tesla's Surprise Quarter: A Case Of Accounting Adjustments, Not Operational Improvements

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About: Tesla, Inc. (TSLA)
by: Sunil Shah
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Summary

Although several articles have questioned the operating miracle in Tesla’s September results, the details just released in the 10Q form shed more light, especially into the "how."

Through an investigation of the three 2019 10Qs and the reserves movements, one can distinguish how much of the profit jump stemmed from operational improvements or from accounting adjustments.

This article demonstrates the profit jump was far more due to revisions of reserve balances than an improvement in operations. Sell Tesla while the delusion persists.

Tesla's (NASDAQ:TSLA) third quarter results certainly caught the street by surprise. From a consensus expectation of a loss at $0.23 per share, the profit of $1.86 was the very definition of an earnings