Tesla Inc. publishes updated production and delivery data more than once at the end of each quarter, and these figures change frequently, raising questions about the quality of the company's accounting function at the turn-over of the department.
Changing numbers also give managers and board members of electricity companies the opportunity to pre-trade material information that often shifts the price of shares, says an expert.
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published a press release immediately after the end of each quarter with brief information on the number of cars produced and delivered in the previous three months. This press release also reveals the number of vehicles that are shipped to customers, and often the cumulative amounts for these key items on an annual basis.
When Tesla later officially announces profits for the quarter, usually one month after the end of the quarter, the production and supply numbers from the previous period that were announced often change, sometimes increase and sometimes decrease, but rarely coincide with previous messages.
For example, on January 2, 2019, Tesla released a press release for the fourth quarter production and Refurbishment Supply, which announced that 245,240 vehicles were delivered in 2018. Tesla also provided a breakdown of the total number of models 3s delivered in 2018 – 145,846 – and the total S – and X – 99,394 vehicles delivered.
The January 2 press release interrupted supplies for 2018 by model, but these figures highlighted the delivery of 236 more Model 3s and 84 more Ss and Xs for the year than were reported cumulatively throughout the year, 244,920.
When the press release for the fourth quarter of 2018 of profit came out on January 30, the total number of S and X models delivered in 2018 is again higher, now 99,475, or 81 cars more than the published on January 2.
10-K with the auditor's opinion was not filed with the SEC until 19 February, almost three weeks after the untested fourth quarter and the declared earnings for the whole year. 10-K has yet another total annual total of deliveries that is higher than announced on January 2 with 266 vehicles and 32 more than the announced profits for a new total of 245,506. See also: Tesla Short Sellers Still Affecting Doubts, But Figures Support Profits
This kind of change is also observed during other periods, as the graph shows.
Most of Tesla's car sales revenue is recognized when control is transferred to customers. At an average price of $ 57,000 for Model 3s and $ 72,750 for Ss and Xs, this difference is equivalent to approximately $ 19,5 million. More revenue for 2018 announced on January 2 of what is cumulatively announced for each of the four quarters of the year. The extra $ 19.5 million in revenue is only 0.11% of revenue of $ 17.6 billion in car revenues that Tesla will continue to report for the entire 2018. This is much less than 5% of the revenue that can be used. is considered to be a significant difference for investors.
Yet these figures are important if investors think they are – and Tesla's shares are often the news from the company.
Joseph Schroeder, assistant professor of accounting at Indiana University, told MarketWatch: "Information is essential if a reasonable person is likely to consider it important." Although the differences in the quantity of supply can not in itself to be quantifiable for the financial statements, every part of Tesla's news often has a great impact on investors' perceptions about the company's future. "
A Tesla spokesman reported that the company in the production / delivery press release noted that The spokeswoman said the company did not believe that these differences were a matter of control but rather the final validation of all documents, and the differences were insignificant
Schroeder told MarketWatch: "Companies are rounded the number of queries and press releases, but to the extent that differences are accumulated by the end of the year to something more significant, they have the potential to change the interpretation of information by users. It is therefore important for companies like Tesla to invest in strengthening control over reporting and disclosing key data to ensure consistent financial reporting. "
A close follower of the company said Tesla reported production and supply differently from other carmakers. 19659002] "There is increasing evidence that Tesla does not follow production and supply tracking standards as well as reporting standards that are common to large manufacturers. This allows maximum flexibility for Tesla at this stage of its development as a player in the industry, "said EW Niedermeyer, chief editor of mobile technology at TheDrive.com.
Niedermeyer told MarketWatch that since Tesla is a new car company, it can be felt. obliged to provide detailed updates on the progress of production and supply.
Tesla wanted to show they were able to increase their production to Model 3 by 2017. This is never a problem when major carmakers are introducing a new model. They do not disclose much more about vehicle delivery and periodic production data at model level almost disappeared, "said Niedermayer.
Chief Executive Officer Elon Musk and Tesla are bound by the September 2018 agreement with the SEC. Chief Executive Officer and Company with allegations of false and misleading claims for a potential deal to accept Tesla private via tweet.
Musk again drew the attention of DSK in February 2019 for ineffective control of material non-public information, including production and delivery data. After the markets closed on February 19, Musk published on its website up-to-date information on car production:
Several hours later, Musk published another tweed to correct the previous one:
SEC officials asked Musk and Tesla again to confirm whether Musk's new tunnel on February 19 complied with the Tesla pre-approval procedures required by the settlement of September 2018. Both Mousse and Tesla's lawyers confirmed that the disclosure of Moss's guidelines for production numbers was not previously approved by the lawyers of the company.
In reviewing the original agreement of September 2018, Judge Alison Nathan ordered Musk and Tesla on 27 April to obtain prior approval from an experienced Tesla-appointed securities attorney for each written communication containing information on several financial topics, including "Production or Sales Numbers or Deliverables (whether actual, predicted or predicted) that have not previously been published by prior written communications" issued by Tesla or who deviate from the previously published official guidelines of the company.
Tesla is also a significant turnover in its key accounting and financial positions over the past three years. Dave Morton, the chief accountant of the company, left the company on September 4 after just one month of work. According to CNBC.com, Morton was tied to take Deepak Ahuja as Chief Financial Officer.
According to company data, Ahuja returned to CFO in 2017 after retiring in 2015 and announced in January that she would retire again. Tesla named Zahari Kirkhorn, who has been with Tesla since 2010, and has been vice president of Finance, Financial Planning and Business Operations since December last year as Chief Financial Officer in March. Vaibhav Taneja, formerly the corporate controller of the company, was also named Tesla's new chief accountant.
Tesla's insider trading policy, described in its most recent proxy, does not provide any details on trading restrictions during power interruptions. A spokesman for Tesla said Tesla has power interruptions that occur before deliveries are released and continue until the end of profits. Like many public companies, he said, Tesla has trade lockdown periods that are being implemented and its executives may also have predefined plans for 10b5-1. The plan under rule 10b5-1 is a written securities trading plan which, if established in good faith when the person did not know about material non-public information, gives the executive or the director protection against indictment insider trading. This is true even if the transactions are done while the individual may be familiar with material, non-public information. Read: Chiefs and directors are insider trader for pre-knowledge of audit issues, new study found
Schroeder of the University of Indiana, co-author of the new working document, "Process Audit, Private Information, and Insider Trading, told MarketWatch, "Insofar as Tesla's production and sales reports are material, it is important that key internal insiders abstain from trading before publishing this information. These reports appear shortly after the end of the quarter, so insiders have to be sure that the transactions carried out before the end of the quarter do not violate the prohibitions on the trading of material non-public information.