1/ Is $TSLA's $399/mo Model 3 leasing program losing money despite seemingly high margins? Short thread on article by @SeekingAlpha's Bill Cunningham featuring a careful reading of $tsla SEC filings & meticulous data gathering. Lots of insights for both bulls & bears. Link at end
2/ Cunningham begins with excellent question about why $TSLA decided to round to the nearest million in latest set of financial statements. His point about the number of shares awarded as stock-based compensation is key. Hiding the dilution?
3/ The main thrust of the article is a close examination of the Model 3 leasing margins. Cunningham does a superb analysis of, as it were, the marginal margin changes. Also, were you aware $TSLA omits from leasing costs the interest it pays on warehouse & auto asset-backed notes?
4/ Those financing vehicles support the leasing program. So does a VIE, whose investors must also be paid. Are those payments included in leasing costs? The answer surprised me.
5/ Cunningham carefully dissects the "Services & other" category, yielding many more insights. Here's one for the bulls: there's no evidence $tsla is inflating trade-in values.
6/ Later, Cunningham gathers & assembles data to see what's happening with Finished Goods Inventory. He wonders whether, in Q3, $tsla was not especially aggressive in disposing of used cars turned back under buy-back guarantees (resale value guarantees). Now, why might that be?
7/ Here's the link. I wish Bill would join Twitter simply to broadcast when his articles are published. He does truly exemplary work on $TSLA & other public companies as well (for instance, $PCYO). seekingalpha.com/article/431291…
