Trying to keep track of all the problems at Tesla Motors Inc (NASDAQ: TSLA) or with its cars is getting harder and harder – like trying to count the cockroaches in a bad infestation as the problems seem to be multiplying while the inspectors (e.g. the White House, current administration and Sacramento) all seem to be no where in sight. Just consider the following cockroaches or problems:
Creative Accounting. A recent Bloomberg article (Are There Cockroaches Under Tesla's Hood?) did a good job of outlining the creative accounting that goes on with the books of Tesla Motors that should make the accountants at Chinese reverse merger stocks proud. The article notes how the latest Tesla Motors earnings report under the headline of "Net income (non-GAAP) of $16 million" spends parts of the first three pages discussing that figure and other nonstandard metrics that don't comply with generally accepted accounting principles (GAAP) with the actual GAAP results beginning at the bottom of the third page. But there's even more:"Tesla waited until page four to mention that it had a third-quarter net loss of $38 million under GAAP. It didn't show a table reconciling its GAAP and non-GAAP numbers until several pages later."
What's wrong with emphasizing the positive and burying the negative? Any other company who tries it would probably be met with an SEC investigation as it violates decades old report rules and then there is the "cockroach theory" about seeing one problem (like a cockroach) probably meaning there are more and possibly bigger problems (a big infestation in your walls scurrying around) that you aren't seeing…
Exploding Teslas. Recently, a Tesla driver supposedly ran over some sort of metal object at high speed (which penetrated the bottom and the batteries) causing his car to catch on fire (after all and if true, metal objects on the road and cars with very high voltage probably don't mix). You can see the video here on YouTube, Elon Musk taking softball questions about the incident on Bloomberg here and the left wing The Young Turks online show coming up with more excuses here ("It happens to all cars…"). Luckily for Tesla Motors and for investors alike, the incident happened during the so-called government shutdown, but as Lauren Fix recently noted, Tesla Motors was never hauled before the government and there was no safety recall or technical services bulletin issued – like what happens when every other car company has a major problem. Its also not the first fire incident either as apparently there have been a total of three known ones in the past two month plus there is another video posted on YouTube a few years ago (click here). Consumers as Guinea Pigs or Test Drivers. One does have to wonder if Tesla drivers aren't the equivalent of test drivers or guinea pigs for Tesla Motors' products. A quick look at Tesla Motors's official Forum reveals problems with leaky or noisy sun roofs (click here, here, here etc), cars not locking properly (click here or here but then again, who would want to steal one?!!!) and a list of other glitches, quirks and peccadilloes identified by Green Car Reports. Then there are the door handles which, as this video on YouTube shows, would have triggered a recall and lots of lawsuits to "protect" consumers (especially children) in the name of safety if we were talking about any other product – as would any of the other "glitches, quirks and peccadilloes" mentioned by Green Car Reports. Factories That Burn Workers. The AP has just reported that the San Francisco Bay Area Tesla Motors factory where three workers were burned by hot metal was previously cited for a safety violation that led to an injury. Two of the three Tesla Motors workers who were burned remain hospitalized, but don't expect state officials to do much more than give a slap on the wrists and at least the cars aren't being made in Mexico or China. Trial Lawyers are Circling. Although trial lawyers, like hardcore Tesla fans/drivers, the media and environmentalists, are normally a Democratic Part constituency, they are now breaking ranks and circling Tesla Motors as I am seeing at least four press releases this month in the Yahoo! headlines from trial lawyers planning class action suits against the company. After all, where there's smoke, there's usually trial lawyers looking for a match…With that said, its no surprise that Tesla Motors is down almost 29% since the start of October when the stock peaked (although its still up over 600% since July 2010):
And the latest technical chart is looking rather bearish:
What's the good news among all of the above bad news? Lets face it: As a "green company" like Solyndra, investors should not expect any investigations of Tesla Motors by the SEC, Consumer Protection Bureau and any other government agency (unless it implodes which is unlikely) so long as Democrats control the White House while even Congressional Republicans probably don't want touch the company and risk looking anti-green (besides, their hands are full "investigating" all of the ongoing White House scandals…) So shorting Tesla Motors could be just as dangerous as investing in the stock.
Nevertheless, trying to count all the cockroaches at Tesla Motors is getting harder and harder for objective investors and ultimately to consumers alike - except perhaps to true believers in the cult of Tesla Motors…
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