Tesla (TSLA) accounting raises red flags as report shows $1.4 billion missing
The actual source is Financial Times, but it’s paywalled.
Compare Tesla’s capital expenditure in the last six months of 2024 to its valuation of the assets that money was spent on, and $1.4bn appears to have gone astray. Tesla didn’t report any significant enough change in the usual suspects to justify the difference.
The report also points to other red flags, like Tesla claiming to sit on $37 billion in cash and yet it raised $6 billion in new debt last year.
Finally, the FT report also points to Tesla not offering share buyback or dividend despite claiming a $15 billion operating cash flow last year, higher than its CAPEX.
Jacek Welc, professor of corporate finance at the SRH Berlin University of Applied Sciences, compares these red flags to recent financial scandals, like Wirecard, Longtop Financial Technologies, and NMC Health.
The accusation is that TSLA is accounting operating expenses as investment expenses.
We have seen this in the past: a CEO realizes his earnings are in the negative they remove some operating costs away from their books to make earnings look positive. Since these costs are actually paid and out in the open they have to account for those payments somehow so they book them as investment expenses instead.
This artificially increases earnings but also creates two holes:
- They didn’t actually gain any assets from the “investment”
- They are missing the cash that was supposed to be earned (and taxed)
They try to cover these holes up, but from the outside the companies exhibit the following symptoms:
- The value of their assets doesn’t add up to the amount of investment they claim to have paid. (this is a discrepancy that provably exists in TSLA financial reports)
- They suddenly overvalue some existing assets in order to make the above point less obvious (this has not been shown so far with TSLA)
- They seem to hold large amount of cash they don’t seem to use for anything, because it exists only on the books and not in actual bank accounts. (TSLA is sitting on $36B cash that they are not using - wouldn’t it be a great time for buy backs?)
- They borrow money to cover the actual operating expenses and taxes (TSLA did raise $6B in debt last year despite having claimed $16B in positive cash flows)
The fact that their finances and behavior look similar to what companies like Wirecard were doing before being exposed might be a coincidence. I’d look for following news to determine what is going on:
- TSLA using good part of the $36B in cash for stock buybacks would dispel the accusation.
- Audits and or journalist not being able to locate the $36B in existing bank accounts would confirm the accusation.
- TSLA’s concrete investments being suspiciously corrected upwards to show being worth more and more than before would hint that this fraud is happening.
- TSLA taking out more loans in 2025 would hint that they don’t have the cash
