TheLastBearStanding Profile picture
Apr 6, 2021 27 tweets 12 min read Read on X
The Robotaxi Repo - Part 2: A theory of how Tesla utilizes lease accounting and Robotaxis to turn collateralized borrowings into sales and achieve paper profitability. $TSLA $TSLAQ (1/25) Image
Disclaimer: I have no claim of actual knowledge, all information is sourced from public information. This is not investment advice and all opinions are my own. (2/25)
The Robotaxi Repo Theory: Tesla overstated S/X sales in 2018 using new lease accounting methods, however this led to large 1Q19 writeoff. To avoid further writeoffs, TSLA declares cars appreciating assets in 2Q19, allowing collateralized borrowing to be considered sales. (3/25)
There is significant evidence to support this theory, including many accounting red flags, financial evidence in Tesla's international revenue, and qualitative statements by Tesla in 2Q19 seemingly meant to support and disclose this concept (4/25)
Under Tesla's lease accounting, certain international leases are considered sales, if the expected future market value exceeds the buyback obligation. Only international leases are considered sales in this fashion. (5/25)
However a pure repo could still not be considered a sale, since the backback obligation would exceed the purchase price, and cars depreciate. (6/25)
However, in 2Q19, Tesla declares that their cars will appreciate. With an appreciating asset, a repo could indeed be booked as a sale. This would allow TSLA to book collateralized borrowings or inventory repos as sales (7/25)
Red flag: Tesla was widely reported to be under significant financial stress in 2019, with Musk stating later that the company had just 1 month of cash at points during the Model 3 ramp, yet began turning consistent profit in 3Q19 (8/25)
Red Flag: Tesla had turned over two CAO and one CFO in the past year, during which it adopted ASC 606, an industry standard change, but one that provided management more leeway in booking leases as sales. (9/25)
Red Flag: Revenue Recognition for international leases has several eye-raising components and could be used as way to overstate sales, subject to aggressive management assumptions. Domestic and direct leases are not booked in this way. (10/25)
Red Flag: In 1Q19, Tesla re-writes its rev. recognition section from the 2018 10k, creating ambiguity between its rev. recognition and revenue by source disclosure. In 2019 there are meaningfully fewer "Auto sales with RVG" despite Intl revenues increasing dramatically (11/25)
Red Flag: In its 2019 Audit, PWC adds two "Critical Audit Matters": International Lease Revenue Recognition and warranty accounting. (12/25)
Red Flag: From 4Q18 to 2Q19 Tesla dramatically reduced the detail and commentary provided in its quarterly production and delivery disclosures, and stopped disclosing customer vehicles in transit. (13/25)
Red Flag: Tesla demonstrates key characteristics noted in SAS 82 (audit guidelines) for "classic risk factors associated with management fraud", including compensation structure, obsession with stock price, aggressive targets, cash flow issues, and subjective accounting (14/25)
Financial Evidence: Beginning in 2Q19, "Other" international revenue increases dramatically while inventory declines to 4 year lows. This growth focused company provides almost detail on this growth (15/25)
It is assumed that Intl rev. growth is due to growth in EU, however using EU registration data, we can segregate into EU/China/Other. Unlike EU/China which decreased in late '18, and rebounded in 2019, Other increased throughout the two years with the exception of 1Q19 (16/25)
The $500M 1Q19 writedown fills the hole in Other Intl Rev., indicating that this is where there international leases booked as sales show up. this supports that '18 sales were overstated, written down in 1Q19, but the growth in this rev. continued without further writeoff (17/25)
Qualitative Evidence: In 2Q19, Tesla claims its cars are appreciating assets due to future revenue from non-existent robotaxi network. This claim is repeated at Autonomous Day in April. The specificity of this language w/r/t lease accounting loophole is significant (18/25)
At Autonomous Day, Musk references a change in leases, TSLA will receive cars back, Model 3 appreciates, and "customers" are fronting money for robotaxi network. When asked about financing and B/S commitment, Musk: "I think we'll make the moves we think we should make" (19/25)
Tesla has a history of using product announcements to push through questionable corporate actions: See Solar Roof Tile to gain support for terrible SolarCity acquisition (20/25)
In 2019, CarMax stopped listing used Teslas just as Carvana began listing them. In 2020, Carvana began listing used 2019 Model 3s above the current listing price of a new car. If Tsla was merely trying to influence real RVG, why take extreme step of showing appreciation? (21/25)
Result: Despite noted financial stress in 2019, Tesla miraculously shows profitability beginning in 3Q19 and every quarter since. In May 2019 Morgan Stanley had a $10 (pre-split) downside price for TSLA given financial stress and demand issues (22/25)
Robotaxi Repo 1 estimated billions in overstated sales based on Intl rev. This report provides further evidence for the theory and quantum of impact, but given the lack of information required to provide a confident estimate, this report will not estimate of the impact. (23/25)
Historical Parallels: Enron was named the America's Most Innovative company from 1996-2001. Stock exploded at height of dot-com boom (P/E of 70). Their accounting scandal involved repos, booking profits off expected future values, and moving debts of B/S. (24/25)
If none of this is true, Tesla should be able to readily answer the following (25/25)

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with TheLastBearStanding

TheLastBearStanding Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @LastBearStandng

Apr 5
1. No, it wasn't a joke. I think Blade $BLDE is one of the most underappreciated and undervalued stock in the market.

Revenue: 54%
Seats Flown: 45%
Largest organ transplant aviator in the country

👇👇 Image
2. In just two years since entering the organ-transplant space, it has grown organically to be the largest player in the country. Its scale and platform has allowed it to outcompete and consolidate a fragmented regional industry. There is >70% of this market left to capture. Image
3. Despite the success in medical, investors are concerned about the impact of Transmedics' (TMDX) vertical integration and declining BLDE revenue over the past two quarters. Understandable... but they have it wrong. Image
Read 14 tweets
Apr 1
1. I've looked through hundreds of discarded deSPACs and think Blade Air Mobility $BLDE is one of the most unappreciated and undervalued stocks in the market. Image
2. The company trades at a basic market cap of $209 million at $2.78/share, compared to $166 million of cash on the balance sheet at year end. The market says this business is worth almost nothing... which is odd...
3. Because the company has grown revenue ~3x in two years from $67m in 2021 to $225m 2023. Some of this growth has come via acquisition, but the biggest driver is its medical segment, where the company is the largest air transport provider for organ transplants in the country Image
Read 14 tweets
Feb 14
Blackstone Mortgage Trust $BXMT reported 4Q23 results this morning.

Here are the implications for Arbor Realty Trust $ABR, before they report this Friday the 16th...

Bears should take note...🧵 Image
$BXMT and $ABR have similarities - floating rate mREITs, both under scrutiny and the subject of short reports by @muddywatersre and @viceroyresearch, respectively. Some overlap in assets. Both reports make similar arguments around overstated collateral and future credit losses.
This morning $BXMT reported a significant build in credit provisions for the second quarter in a row.

The provision eliminated all GAAP profits for the quarter, resulting in a net loss of ($0.01)/sh Image
Read 11 tweets
Oct 10, 2023
Went to the SBF trial this afternoon for Caroline Ellison's testimony.

Quick reactions in no particular order:

👇👇
- FTX customer funds were always a liquidity backstop for Alameda, and were used dating back to 2020.

SBF and Ellison both always planned to use customer funds to cover potential margin calls at Alameda
- excluding "Sam coins" Alameda had a negative $2.7bn NAV *all the way back in 2021* when the crypto market was still booming

SBF took $3bn for more "venture funding" despite a negative liquid NAV in late 2021
Read 13 tweets
Jun 23, 2023
Yield Curve inversion predicted the last four US recessions, making it a key leading economic indicator.

But none of those recessions actually began while the yield curve was inverted.

Instead it was the *reversion* of the yield curve that signaled an imminent recession.
The yield curve has now been inverted for a year - the inversion is deeper than it has been since the 1980s.

And rather than *reverting* (the key recession signal) the inversion only seems to grow.
If we are waiting on a reversion to signal a recession, there is a still a long ways to go.

But maybe this time is different. Recent yield curve trends have occurred during a long period of disinflation.

In an *inflationary* regime, the curve behaves differently.
Read 6 tweets
May 2, 2023
Well worth a read, and pretty damning report from @HindenburgRes

But there is an interesting counterargument, at least theoretically...
The implied market cap is based on total shares outstanding, but as Hindenburg notes, only 11% is public float and the rest is owned by Icahn.

The huge dividend is only possible because it only goes to the small portion of public shareholders.

Icahn gets stock distributions
So the common equity is really more like two share classes, with very different payout terms (cash vs. PIK).

The cash pay is arguably more valuable - its a hefty, real cash yield.

Meanwhile the stock-based distributions rely on future equity value
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(