Tesla's share price has soared 616% since March 2013. Such a meteoric rise has caused some investors consternation and encouraged a closer look at Tesla's SEC filings such as last month's 10-k.
Doug Kass of RealMoneyPro.com and Seabreeze Partners was highly critical of Tesla's book keeping this weekend. "Tesla's accounting has long been controversial. In a prior post, I characterized Tesla's reported profits as EBBS (earnings before B.S.)."
Kass specifically called into question Tesla's claim that it went from $8 million under accrual on 2012 warranties during the first three fiscal quarters and then suddenly reported a $2 million over accrual for the year in its fourth quarter filings.
"In essence the question comes down to whether Tesla's warranty reserve release was used as a cookie jar to boost profits in the latest quarter, or did the company simply miscalculate its warranty calculations," said Kass.
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While revenue growth has spiked, production costs have not declined to a point necessary for the company to make a profit. Net loss in 2013 was 74% or $0.62 per share.
One step in alleviating these concerns is the recently announced $5 billion battery factory that Tesla has planned to build. The factory will employ 6,500 and is expected to reduce the cost of its lithium ion batteries by 30% by the end of the first year of volume production.