Tesla 10-Q Shows Capital Expenditure Plans, Musk Compensation Details

Rob Maurer

Tesla today filed its 10-Q with the SEC for the third quarter of 2020, sharing more details on a few elements of their business.

Particularly of note was Tesla's capital expenditures (capex) guidance. Previously, Tesla had expected capex of $2.5B - $3.5B in 2020, 2021, and 2022. Coming out of Battery Day, Tesla now says, "we currently expect our capital expenditures to be at the high end of our range of $2.5 to $3.5 billion in 2020 and increase to $4.5 to $6.0 billion in each of the next two fiscal years."

The increased capex plans were mentioned by Tesla CFO Zach Kirkhorn on Tesla's Q3 conference call, and the 10-Q has now amplified reporting on the subject. Here's a look at Tesla's historical and projected capex:

Screen Shot 2020-10-26 at 4.59.15 PM

Tesla also shared more information in the 10-Q about CEO Elon Musk's compensation plan. The company notes the significant impact on selling, general, and administrative costs (SG&A).

"SG&A expenses increased $292 million, or 49%, in the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. The increase was primarily due to an increase of $307 million in stock-based compensation expense, of which $282 million was attributable to the 2018 CEO Performance Award."

Notably, the entire year-over-year increase in SG&A expense was driven by stock-based compensation which is a non-cash cost, despite Tesla growing revenue 39% over last year's Q3. This suggests that Tesla has been generating significantly more operating leverage than the surface-level financials would suggest. Musk's compensation plan will have a significant influence on future quarters, so the size of the impact is important for investors to understand.

For more analysis on Tesla's 10-Q filing, see the included video and be sure to follow Tesla Daily on The Street.

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Disclosure: Rob Maurer is long TSLA stock and derivatives.