Articles That Seeking Alpha Doesn't Want To Publish

[chickensevil]

Wow, that is a really awesome breakdown of pointing out the underhanded tactic that LT is trying to pull with his BS gross margin calculations. He has been complaining about the GM's for a long time, but I hadn't considered that even IF Tesla did move all their R&D over that it would have the bonus effect of making their profits look better instead!

And I also agree about the whole dealership claims. The only thing that might be fair is the number of employees in a service center from Tesla to Porsche. But sales? gimme a break! They have maybe 6 people per sales store (including the manager) and they don't pay out their employees any commission (thereby lowering the employee costs further). How many people support a sales staff at a local dealership? At least double in the smaller locations, and that number likely only goes up from there.

Gotta love underhanded tactics to scare people into your position.

 

[gpetti]

I just saw it on a Tesla alert and read it on SA. Great response to Illogical Thought.

 

[Auzie]

Great rebuttal 32no. You masterfully exposed LT's bias in interpreting TSLA financial results, point by point, sample below.

Logical Thought decided to move Tesla's R&D costs, which totaled $135.873 million in Q3 2014, to COGS to be comparable to Porsche. This brings Tesla's gross margin to 12.9%, compared to Porsche's 29.2%. However, the number Logical Thought moved up to COGS was $74.051 million (he wrote $75 million) because he amortized 52% (this is the same ratio as Porsche, which is arguably inapplicable to Tesla) of Tesla's R&D expenses over eight years and added them to the remaining 48%. However, it is worth noting that Tesla does not actually amortize R&D because almost all of its R&D is not model specific, which is why it reports R&D under OpEx rather than COGS. Therefore, one can conclude that this adjustment was done only for comparison purposes, and not because Tesla's incorrectly reports its gross margin.
But there is a major flaw in Logical Thought's analysis that makes it deceptive. By including the partially-amortized R&D costs in COGS, he actually increases operating profits while decreasing the number he is looking to compare: Gross profits. This calculation is misleading because Logical Thought doesn't mention the fact that bottom line profits would increase if he were to move the R&D to COGS. Tesla would have had operating profits that are $61.822 million ($135.873 million minus $74.051 million) higher than they were in Q3 due to the amortization of R&D. Based on this method of accounting, Tesla would have had a $0.45 per share profit on a non-GAAP basis instead of a $0.02 profit. Moreover, this would produce a profit of $1.86 over Tesla's last four quarters instead of $0.58.

LT's spreading FUD is not likely to cause too much damage now, when times are good and Tesla is in a strong position at the moment.

However, if there is any sign of weakness, FUD attack can cause significant damage and any rebuttals no matter how accurate and factual would be less effective in such circumstances. So your timely rebuttal is like a preventative medicine, much more effective than the treatment given during an acute attack.:wink:

I felt that there was a moment of weakness last week, with Twittergate fiasco and preceding events. Luckily bears did not pick up on all the drama until it was over.