{"id":985,"date":"2018-04-30T09:53:52","date_gmt":"2018-04-30T09:53:52","guid":{"rendered":"https:\/\/www.antya.ca\/research\/tesla-inc-new-accounting-policy-antya-explains-impact-on-financial-statements-part-two\/"},"modified":"2026-02-17T06:27:32","modified_gmt":"2026-02-17T06:27:32","slug":"tesla-inc-new-accounting-policy-antya-explains-impact-on-financial-statements-part-two","status":"publish","type":"post","link":"https:\/\/www.antya.ca\/research\/tesla-inc-new-accounting-policy-antya-explains-impact-on-financial-statements-part-two\/","title":{"rendered":"Tesla Inc. \u2013 New Accounting Policy \u2013 ANTYA Explains Impact on Financial Statements \u2013 Part Two"},"content":{"rendered":"
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Bearish sentiment on Tesla Motors Inc (TSLA US) is rising towards a crescendo. Delayed Model 3 ramp-up has given a new scalpel to bears, who apparently want to go for the jugular and send Tesla careening to the dustbin of history. Tesla, on the other hand, has a few hidden tricks up its sleeve. We explain below.<\/p>\n<\/div><\/div>\n<\/div>\n

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Following up from our report Tesla Inc. \u2013 Prophets of Doom Could Be Blown to Smithereens by Conservative Accounting, this report highlights that Tesla Motors Inc (TSLA US) is changing its accounting policy and adopting a new revenue recognition standard from January 1, 2018. Investors that have followed our work on General Electric Co (GE US), most recently discussed in GE : Marching to A Single Digit Stock Price \u2013 Restating the Past for a Brighter Future \u2013 Part Four, would recall that we highlighted impending accounting policy changes at GE. We also discussed the probable impact upon retrospective adoption on GE\u2019s financial statements. In our view, most recent Q1-18 quarterly results reported by GE, were better than expectations of some investors due to creative accounting. In general, if accounting issues are of interest to you, then our colleague Nitin Mangal writes some of the best accounting and governance research on India.<\/p>\n

In Tesla\u2019s instance, accounting has been conservative and given the limited operating history of the business, as well as capital constraints, Tesla\u2019s revenue recognition has been cautious. In the absence of Model 3 ramp-up issues, adoption of new accounting policy by Tesla would have had a seismic impact on reported financials. Even now, we believe that forthcoming Tesla disclosures are likely to reset bearish expectations of impending doom while giving the bulls more breathing room.<\/p>\n

Of course, a failure to resolve Model 3 production issues will impact the stock negatively, most likely in the first week of June 2018, when the company reports production numbers for the month of May 2018.<\/p>\n

Tesla is Adopting a New Accounting Policy<\/h3>\n