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Stock Split

Stock Split

It looks like wall street want's to drive the stock down so they can buy. All the bad press in light of strong earnings is evidence of this market manipulation. Why not split the stock. Current owners get more shares while people who missed the IPO can buy in.

July10Models | November 25, 2013

What difference does the number of available shares make? Just started a long term position in TSLA at 121.5.

SunEV | November 25, 2013

Stock splits are fun, but they don't change your percentage ownership in the company, and they don't increase the value of your shares. They're a vestige of a time long ago when people liked to buy shares in round lots of 100, so companies would split their shares to make round lots more affordable.

Captain_Zap | November 25, 2013

Splits do help a if you want to buy leaps. You still have to buy those in lots of 100.

chrispga | November 25, 2013

@ Smith 1 I'm not really a troll but I have to disagree with you. Fox news has the same views as you've listed above. So does OPEC and all the people who stand to gain from fossil fuels being our only option. The world needs fair competition. Not "fair and balanced news."

Remember that you're seeing stock analysis from people who didn't see the iPhone coming. Apple flipped that industry on its head. You can't find a Verizon, AT&T, or Sprint app pre installed on an iPhone.

Tesla is aiming to do the same thing with dealer franchise laws. The law breeds unfair competition in the auto industry. Yes, Tesla has the chips stacked against it because this has never been done before. They redefined the luxury car. If you have an ICE car, you can't really call it luxury anymore. ICE cars are the flip phones you used to have. Remember them? Anyway, that's a whole nother rant.

Tesla is laying out its own Supercharging Network and Battery Swapping stations. 90 seconds to change out a battery for the same cost as a full tank of gas is amazing. Consumers will eat that up but when they realize that they can drive all day on one charge for free, they will flip. It's like having the verizon "nationwide" plan enabling you to make calls in any state. But, how often do you travel outside your state? Ha, in terms of coverage, Tesla will be the Verizon of cars. Let's hope the customer service is the Apple of customer service.

Money makes people do crazy things. If you missed an opportunity to buy in on Tesla and you can't do anything but watch the stock price soar; you might do some crazy things. If your business is built on something that will lose if Tesla wins; you might do some crazy things. If I was threatened by Tesla and I had billions; I would buy 5 Tesla Model S's a year and burn all 5.

OPEC, Other Automakers, Big Oil, Lawmakers who stand to gain from oil; Please buy me two Tesla's and I'll burn one for you. PM me.

About the stock split: If I own 1 share at $100 and the stock splits, do I get 2 shares at $50? Or can it split to 5 shares at $20. People will buy Tesla shares at $20 right now. Even at $120, Tesla Stock is a bargain but Wall Street want's it lower. Current shareholders don't lose anything and Tesla could make more money with the new investors. I could be wrong with how splits work but it would put Tesla in charge of its own destiny instead of the forced stock price manipulation by Wall Street and the media.

chrispga | November 25, 2013

Also, I'm not an environmentalist an animal lover. I hate wildlife and dogs. Cat's aren't bad but I don't own pets. I think it's funny that people have to walk around picking up dog crap. The Tesla Model S is just a leap forward in automotive technology. Like the iPod was to the CD Player. Does anyone still have a cd player?

rdalcanto | November 25, 2013

@ Smith1. Sorry, but you are coming off as a major troll, or you haven't done your homework.
GAAP numbers are not a good indication of Tesla's profitability because they don't allow Tesla to properly count the revenue from leased vehicles. Tesla has a 20% profit margin per car. In other words, they have around $20,000 in PROFIT per vehicle. They are spending most of it on supercharger, store, and service center expansion, but they are still cash flow POSITIVE (more money in the bank at the end of the quarter than they had in the beginning). The problem is that in the GAAP accounting, Tesla is only allowed to claim 50% of the money they get when they sell a "leased" vehicle, even though they are getting 100% of the money up front. This is a mistake that only applies to Tesla, and not other auto makers. In 3 years, if anyone actually turns the car into Tesla instead of selling it themselves, Tesla will certainly make an additional profit given low production numbers and high demand, so those Leave vehicles will actually be the source of additional revenue, and not a liability. So yes, Tesla is profitable right now, as the non-GAAP numbers indicate.

omarsultan.ca.us | November 25, 2013

Wow @Smith1 - kinda funny going on the offensive and labeling as a troll anyone who disagrees with you. Bravo.

Now, to the rest of you misguided (I am giving you the benefit of the doubt) post.

Do you know why Tesla reports both GAAP and non-GAAP numbers? Well the first one is easy--its the statutory requirement. If you go look at the 10-Q filing with the SEC, guess what numbers you will find? BTW, anyone that trades stocks based on press releases and marketing literature gets what they deserve.

Now the trickier question: why does Tesla report non-GAAP numbers? Well, per GAAP rules, they need to account for the cars delivered under the buy-back program as leases. This means they take a hit for the cost of building the car in the qtr is was built, but, even though the car has been delivered to a happy customer, they can only recognize a portion of the revenue over time, which actually distorts their profitability. To give folks a better idea of profitability, they also report (clearly marked) non-GAAP numbers. Most other manufacturers don't have this issue since they have a finance arm like GMAC, Infiniti Financial Services, etc. They "sell" the car to the finance arm, which then finances for you. That way, they get to recognize the full revenue of the car in the qtr it was sold.

Now Tesla is not the only one that reports non-GAAP numbers. GAAP is by its nature slow moving and does not deal well with new business models. By doing something new and different (i.e. guaranteeing a buyback price) they now have to work through some accounting contortions.

I know, kinda boring and not nearly as salacious as you would probably have hoped. Time to try something else. Maybe next time you can come back with something more than innuendo and a link to a firm that specializes in class-action lawsuits.

O

Mathew98 | November 25, 2013

Can't we all just flag trolly smith to oblivion?

Pungoteague_Dave | November 25, 2013

It isn't unfair to require TM to exclude the "sales" of a portion of the revenue from leased cars because they are retaining 100% of the liability associated with the residual value. I am a CPA and absolutely believe in TM's business plan, but that their non-GAAP accounting presentation is both substantive and optical fiction. They must BUY back the car for a specified price. Therefore that portion of the transaction is NOT a sale in any shape or form. The accounting requirements are correct.

By the way, the SEC has NOTHING to do with accounting requirements, only reporting requirements specific to public company disclosure.

Despite my opinion apparently being in line with his on this one issue, I agree that Smith 1 is coming across as a troll.

AtlantaCourier | November 25, 2013

Investors do not invest in an innovative company like Tesla because they are showing a small non-GAAP profit.

No, its because they believe in the company. These are the people who invested 3 years ago when the stock was $20/share. These are the people who invested when even the non-GAAP numbers where showing massive losses.

These folks were certainly were not being mislead by Tesla when it was understood that profits were years away. Nor are the new investors who believe being mislead now because the non-GAAP profits reported are still very small indeed.

That's not to say that SOME investors aren't being mislead. There are some who are being deceived in the most dastardly way imaginable.

Enter the speculating shorts who deceive themselves.

So many shares were shorted at $20, $30, and $40 per share, that it sent the stock on what has to be one of the most EPIC short-squeezes in history.

It was then, that many of those original investors were rewarded by the wisdom which told them not to be swayed by the numbers. Many shares were tendered at $190.00+/share - paying for their kids college education or a new boat at the dock, perhaps.

I truly feel sorry for what happened to the shorts because whether they were looking at the GAAP or at the non-GAAP, all their money disappeared, ZAAAP! To them, there is no belief in an idea - only "the bet." To bad they didn't bet against Fisker, instead.

Cheers!

Pungoteague_Dave | November 25, 2013

rdalcanto - be careful with residual value assumptions - check out the buy-it-now asking prices on ebay at this moment - lots of cars, including Signatures available for way below retail. TM is assuming $1 per mile and $1,000 per month depreciation on these cars.

How much is a 4-year-old ipad worth? Oops, the iPad was first issued in April 2010, so there are no four year old iPads. Yet we are already into the fourth generation and the first generation iPads are essentially worthless. Functional obsolescence may accelerate when a faster processor pushes people to the next generation S to get better screen refresh and browser speeds. Some hardware limitations cannot be upgraded... and I, for one, am prepared to write off my car about 2/3 in four years and move onto the latest version, just as we do with smartphones (know anyone with a five year old phone?)

omarsultan.ca.us | November 25, 2013

@P_D:

I am not saying the requirement are unfair--I agree that TM is holding some liability and, at the end of the day, the rules are whatever they are. My only point is that sometimes GAAP rules can obfuscate what is actually happening with the business, so its legit to offer a non-GAAP perspective as well as long as they are appropriately labeled.

I am curious how the actual accounting works with the buyback since, in theory US Bank or Wells Fargo is inserted in the process--any ideas?

O

omarsultan.ca.us | November 25, 2013

PS Regarding the SEC and alleged fraud, my point was if you check the 10Q filing, you will see the $38M loss (per GAAP) listed.

Chunky Jr. | November 25, 2013

Google killed the stock split. They used to be fairly common, at least in the tech sector, but once Google went public, stock splitting went out of fashion.

Al1 | November 25, 2013

Tesla provides both non GAAP and GAAP statements as well as reconciliation. And by the way there is nothing illegal in non GAAP accounting.

As far as accounting for leases goes, it does not allow recognizing all of the revenue immediately, but put portion of it as a "liability" called unearned revenue and then recognize it a later time. In theory that makes sense. People may change their mind and then the company would have to return remained portion.

But in reality do you know a single Tesla owner who wants to do that? 99% of owners said they'll do it again. It is current owners who are Tesla's best sales force. So this whole thing about Tesla overstating revenue is ridiculous.

GAAP accounting is not ideal and in general there is no such thing as ideal accounting. That's why it is called Generally Accepted rather then Mandatory or something else.

Also if you look at ICE car manufacturers statements, very big portion comes from financing. In some countries e.g. China it was nothing but financing, for a while. Now, while Tesla gets all of its cash upfront, a regular ICE car manufacturer can recognize all of the money as a revenue.

Now what happens if there is a sudden spike in oil prices? The residual value ICE cars will drop. They may become worthless.

Now does anybody believe people (in China) will keep paying as per contract to US car manufacturer for their cars that have become worthless?

Of course they won't. Big portion of accounts receivable will be never received. There is usually so called allowance for bad debt to account for those circumstances, however does anybody asks ICE car manufacturer whether or not they allow enough for receivable they won't collect?

As far as much of Canadian press sounding like OPEC I am not surprised. With big portion of Canadian economy being oil and gas, while other big portion car parts for ICE cars I am not surprised at all. That said, there are plenty of Tesla buyers in Canada, like there are plenty in Texas.

Al1 | November 25, 2013

@Pungoteague_Dave

You've brought a good point. "How much is a 4-year-old ipad worth?"

Do you want to apply Moore's law to electric car batteries? Then probably Tesla has created some liability to itself with buy back guarantee. But, then why is anybody surprised with Tesla valuation? Look at Apple valuation! Tesla patents alone are priceless!

And why do you want to treat Tesla model S as a commodity? Sure there are 150 million new cars out there every year, but only 20 K Tesla model S-s. How much do you think a legend will cost? And does it make sense to argue that first model T is worthless today, because 2014 Toyota Camry is much more powerful???

If this thing takes off to that extent, people will realize very quickly their model S are among very few items that only appreciate over time. Do you believe current Tesla Model S owners will still line up to sell their cars back to Tesla at some residual value? They will hold to them as most precious item.

And even if they do Tesla will eagerly buy them for no problem at all. They might well be selling .5 million units by then indeed.

So in fact you are presenting the best case scenario as if it was a major risk factor.

And then if this scenario is less likely, and batteries will follow a different pass, then a three year old car is just a three year old car.

I am not saying there is no liability. But GAAP doesn't allow seeing anything but liability. So indeed the best in this case is to show both calculations and let the readers decide for themselves.

Al1 | November 25, 2013

"prepared to write off my car about 2/3 in four years and move onto the latest version, just as we do with smartphones (know anyone with a five year old phone?)"

And by the way here is how most of us go about smartphones. About 10% down payment and then a two or three year contract called "data plan" which more then off-sets the full costs of anything to the vendor.

If it wasn't available I would argue people would still hang around with 5 year old phone, even older, because honestly a phone is a phone is a phone. It is not voice features that have changed. It is that other staff, which made phones "smart".

Al1 | November 25, 2013

Tesla provides both non GAAP and GAAP statements as well as reconciliation. And by the way there is nothing illegal in non GAAP accounting.

As far as accounting for leases goes, it does not allow recognizing all of the revenue immediately, but put portion of it as a "liability" called unearned revenue and then recognize it a later time. In theory that makes sense. People may change their mind and then the company would have to return remained portion.

But in reality do you know a single Tesla owner who wants to do that? 99% of owners said they'll do it again. It is current owners who are Tesla's best sales force. So this whole thing about Tesla overstating revenue is ridiculous.

GAAP accounting is not ideal and in general there is no such thing as ideal accounting. That's why it is called Generally Accepted rather then Mandatory or something else.

Also if you look at ICE car manufacturers statements, very big portion comes from financing. In some countries e.g. China it was nothing but financing, for a while. Now, while Tesla gets all of its cash upfront, a regular ICE car manufacturer can recognize all of the money as a revenue.

Now what happens if there is a sudden spike in oil prices? The residual value ICE cars will drop. They may become worthless.

Now does anybody believe people (in China) will keep paying as per contract to US car manufacturer for their cars that have become worthless?

Of course they won't. Big portion of accounts receivable will be never received. There is usually so called allowance for bad debt to account for those circumstances, however does anybody asks ICE car manufacturer whether or not they allow enough for receivable they won't collect?

As far as much of Canadian press sounding like OPEC I am not surprised. With big portion of Canadian economy being oil and gas, while other big portion car parts for ICE cars I am not surprised at all. That said, there are plenty of Tesla buyers in Canada, like there are plenty in Texas.

Al1 | November 25, 2013

Strange same post of mine appears twice, even though I didn't do it. How is this possible?

Jamon | November 25, 2013

The forum is overcompensating for missing posts :)

Captain_Zap | November 25, 2013

Maybe your post was assasinated and then revived. I saw that happen at once already tonight.

robert | November 26, 2013

@Pungoteague_Dave
No, my phone isn't 5 years old - it is from 1995 and works precisely as intended.

@chrismas
Yes, I own both CD players and SACD players, both of which are infinitely better than iPods with mp3:s - that is, if you value quality. I do not own an iPod. But, of course, I am a professional.

And, I own a Tesla S P85 Sig, and, as far as I can hope for, it will be my last car purchase as a private person. It is so far ahead of anything else that poss. enhancements mean nothing to me. I will be severed from my Tesla, when I am carried out, feet first.

Mathew98 | November 26, 2013

@robert@bis.se - There's nothing wrong with being old school. You're getting every ounce of function you need from these devices. Not everyone wants to have the latest bleeding edge devices.

I do admire your principals where you buy and use what you need, not what others "must" have as status symbols.

My wife demanded and received her Ipad completed with 3G and 64GB options over my objections. She wanted both to "future proof" the device. She didn't need the 3G service because I have MIFI with me at all time and we have WIFI and LAN all over our house. It's been 2 years and she used less than 2GB of the 64GB she demanded. She didn't need to spend extra 60% for the features she didn't need. But she "must" have them. Brilliant marketing Apple!

The only gadget you need and want is the MS. Drive often and enjoy the rides!

rodhoffman | November 26, 2013

Smith 1 just go away - or maybe you mom should kick you out of the basement so you have to get a real job.

Brian H | November 26, 2013

Tesla calibrated the potential buy-back valuation from the market resale value of other high-end sedans. I personally think it will see some action as a trade-in mechanism. It's real function, though, is to establish a "floor" for the rest of the market, rather than as a likely or frequent actual re-purchase.

Rocky_H | December 7, 2013

I see that no one has brought up the actual specific issue that is the problem with Tesla's financial reporting.
@Al1 "Tesla provides both non GAAP and GAAP statements as well as reconciliation. And by the way there is nothing illegal in non GAAP accounting."

You are correct, but are not aware of where the problem is. The actual SEC financial reporting regulations say that a company can present both sets of accounting numbers, but if they do, they must give "equal or greater prominence" to the GAAP numbers. Tesla did not do that. They were leading with their non-GAAP numbers first and then listing the GAAP numbers a few pages later, which is not OK.

So all of that discussion about what is justified and how the buyback program figures in, etc. just isn't relevant to this clear SEC regulation of which type of financials have to be presented first. So it's completely clear that they didn't comply correctly, but I don't know if it was deliberate--maybe the group writing it up didn't know about that rule in the SEC regulations.

jjaeger | December 8, 2013

@Rocky_H - many, many companies do exactly the same (lead w/ GAAP), there is nothing in that regard that runs afoul of the SEC rules.

Mark22 | December 8, 2013

To the original question...

I don't think it would make sense considering Tesla is a young company with a very volatile stock. In a month it could just as easily be at $90 or $200.

Rocky_H | December 8, 2013

@jjaeger, did you mean the other one? You said "Many companies do the same (lead w/ GAAP)". That's obviously true that most companies doe that because that is what the SEC regs require. Leading with non-GAAP is what is not allowed, which is what Tesla did.

jjaeger | December 8, 2013

@Rocky_H - yes, sorry - lead with 'non-GAAP'. There are many examples and nothing that Tesla is doing is outside of the norm. You can 'lead' with whatever you desire, as long as you provide all that is required by rule wrt GAAP. Leading is not a material item.

Pungoteague_Dave | December 8, 2013

Jaeger, I have no problem with it, but there is actually a requirement under securities law to lead with GAAP or to give the GAAP numbers equal prominence on the first page. The SEC has not been diligent in enforcing this recently, but it is a rule.

Rocky_H | December 8, 2013

If you don't believe us about the SEC regulations, here is the site with the actual code. Search the page for "equal or greater", and you'll find the section.

http://www.sec.gov/rules/final/33-8176.htm

jjaeger | December 8, 2013

@rocky_H & PD - and what SEC filings run afoul of the rules? They all look compliant to me. They can write their press releases and handle their earnings calls as most other companies do - provide the data that they feel is most representative of the business. Mixing apples and oranges I believe.

Rocky_H | December 9, 2013

I just went and read their recent 8-K filing from November 3rd. I think the thing that is problematic shows there. On the first page right at the top, they have 6 bullet points in bold font that tells the major accomplishments. Two of the bullet points are their gross margin (non-GAAP) and net profit (non-GAAP). It isn't until page 3 that they get to the rest of the quarterly financials, where they give both sets of numbers.

I guess it may be kind of a grey area. It is a very "prominent" presentation of non-GAAP numbers in bold at the top of the first page, with the GAAP values completely missing from the page. But I guess you could say those are just headlines and talking, and they haven't gotten to the section that is labeled "quarterly results" yet, so maybe those summary headlines aren't the part that counts? I haven't seen other companies' postings that use both numbers to see how it's frequently done. Either way, it does seem fairly minor, so maybe they'll just get a warning and told to stop it.

acegreat1 | July 16, 2014

Do you think tsla will split withi. The next 2 years?

Brian H | July 16, 2014

The first time it passes $1000. >:p

Grinnin'.VA | July 17, 2014

@Brian H | JULY 16, 2014:
"The first time it passes $1000. >:p"

I'd guess that will take another year or so.

Ron $:-)

Red Sage ca us | August 8, 2014

I would say $1500 at 3:1... and Jim Cramer's head exploding. Otherwise...? Never.

Mathew98 | August 8, 2014

Would my 69 shares look 3x more attractive? Wink, wink...

Red Sage ca us | August 8, 2014

If there are any Shorts left by that time, they'll gladly borrow them for a week or two, I'm sure. ;-)

Captain_Zap | August 8, 2014

$1000? That won't make leaps easier to buy.

I've been ready for a split for a long time.

Iowa92x | August 8, 2014

Why bother, end result is the same.

Captain_Zap | August 8, 2014

@Iowa92x

The difference is buying leaps, or not buying leaps.