The release of Tesla's 10-Q this morning has revealed some very unflattering truths behind last week's so-called "stunning" Q3 earnings report, which prompted a massive short squeeze and a nearly 30% jump in the company's stock since last Thursday. The company's surprise "profit" disclosed last Wednesday shocked investors and left skeptics of the company befuddled as to how to explain the jarring swing back to "profitability".
Many skeptics suspected that the 10-Q would shine light on variables like warranty reserves, capex and A/P being juked to produce an impressive, yet unsustainable, earnings print.
And while most suspicions were proven accurate with the release of today's 10-Q, there was one truly staggering indicator that far from soaring, Tesla stock - when stripped of all the accounting magic and potential fraud - should be plunging.
Presenting exhibit A: Sales by region, and specifically the US.
Behind all of the fancy financial engineering, Tesla's U.S. sales fell off a cliff to $3.13 billion in the third quarter from $5.13 billion a year earlier. This marks an astonishing 39% drop that would have resulted in the immediate termination of any other auto CEO.
Because when it comes down to unadjusted bottom line, this is what the unbiased truth looks like outside of a glossed up press release, PowerPoint slides and Elon Musk's spin on the narrative: demand is collapsing.
Tesla also admitted in the regulatory filing that it was able to cut costs for the quarter due to unspecified “commercial negotiations with suppliers.” (stretching out payment terms and temporarily stiffing suppliers). It also got a one time $55 million benefit from revising warranty provisions. The filing from Tesla shows warranty adjustments and other one-time items are a large driver of perceived strength.
https://ir.tesla.com/node/20246/html