Although Tesla’s stocks have through the roof (500% increase this year), Tesla’s accountants have been disclosing certain numbers to up-play the success of the company. This perfectly correlates with our financial accounting class in which we discussed how financial statements can be used to release only selected data in order to portray the company in a beneficial light. In the case of Tesla, they repeatedly disclose data that doesn’t abide by the GAAP. For example, Tesla released their revenue as almost 27% higher than what it actually is when calculated under GAAP. When calculating the earnings per share, they exclude shares that could have been issued to repay debt, resulting in a lower total share count, and in turn a misleading, higher EPS. These misrepresented numbers simply act to boost Telsa’s non-GAAP image; possibly attributing to the significant rise in stock. Also, the technology used in Tesla’s cars is still new and “unproven”[1] compared to the rest of the auto industry, yet they provide a guaranteed four year warranty which is longer than most traditional warranties. Despite the dramatic boom in stocks, the lack of integrity in Tesla’s accounting may lead to a dramatic bust despite their growths.

Article[1]: http://www.theglobeandmail.com/globe-investor/investment-ideas/tesla-financials-a-peak-under-the-hood/article14668932/

A short video demonstrating how consumers are losing faith in the integrity of Tesla:
http://www.theglobeandmail.com/report-on-business/video/video-tesla-shares-cool-after-fire-report/article14679523/