Tesla Motors: Let Confusion Reign?
Tesla Motors’ (TSLA) plans to change how it reports its earnings, something that has the potential to cause plenty of confusion when it releases its earnings on Oct. 26. Oppenheimer’s Colin Rusch and team try to get in front of the change:
Given the potential confusion around Tesla’s anticipated reporting changes, we are publishing an updated model to help investors navigate these adjustments. The critical change in proforma revenue is the recognition of lease revenue not total vehicle value. Due to high percentage of deferred revenue (~35%), this change also materially changes EPS. We expect cash flow estimates to remain intact. We also believe the new reporting structure highlights the importance of Tesla’s lease partners and risks around Tesla’s used vehicle market whether it is older vehicles cannibalizing new sales or the brisk pace of innovation limiting interest in older vehicles. While used Tesla’s have held value well to date, we view the end of lease vehicle strategy as a critical variable for future cash needs….MORE