Please, Tesla, Show Me the Money

No doubt Tesla Motors (NASDAQ: TSLA  ) stock got quite a charge after announcing the company's first-ever profit – a 24% jump between market close on Wednesday and market close on Thursday, and by Friday morning it leapt a further 13%.

I can imagine the Tesla team in the boardroom spraying champagne over themselves at the investors' buying frenzy. And I can see them thumbing their noses at the nay-saying short sellers.

But I have been staring at Tesla's income statement and I just cannot make the company's proclaiming a profit of $15 million coincide with my own concept of fiscal reality.

First off, the income statement shows an operating loss of $5.6 million dollars. After adding back in "other income" of $17.1 million and accounting for interest earned, interest paid, and provision for income tax, we get a net profit of $11.2 million.

There is nothing on the income statement showing a profit of $15 million.

Not only that, but the "other income" item includes $10.7 million from the one-time elimination of the Department of Energy's common stock warrant liability. Take that away and we're left with a profit of $0.5 million.

Then take away the "$6.4 million of favorable foreign currency exchange impact" and there is a loss of $5.9 million.

The company itself says that, using GAAP rules, net profit per share is $0.00.

And, as my father used to say, twice zero is still zero.

Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.


Read/Post Comments (8) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On May 10, 2013, at 3:57 PM, jamesdan567 wrote:

    If they can sell 20000 S models, then they can sure sell 40000. and since they can sell 40K S models, they can very likely sell 80K of them annually That, plus a fair amount of covering by short sellers is why the stock is headed north. Wall Street doesn't care at all about today's earnings. Neither do I.Auto companies make boatloads of money when they can produce beyond whatever their breakeven volume is. Same is true with Tesla.

  • Report this Comment On May 10, 2013, at 4:18 PM, StupidityAlert wrote:

    If Tesla can sell 20k vehicles, then they sure can sell 40k, and if they can sell 40k, they can sell 80k, and if 80k, then 160k, then 320k then 640k the 1,280k then soon thereafter, every vehicle sold in the world. With THAT kind of reasoning, they got to $81/share today. Watching the inevitable bubble burst is going to be every bit as fun as it has been watching it inflate.

  • Report this Comment On May 10, 2013, at 4:51 PM, kcboy408 wrote:

    Haha.. It's like before when they say Apple can be a $1000 stock

  • Report this Comment On May 10, 2013, at 5:04 PM, StupidityAlert wrote:

    Thing is, even though rational investors know TSLA is in a hype cycle, determining exactly where they are on the cycle line is extremely difficult. The dynamic is just too chaotic. So I'm on the sidelines for now.

  • Report this Comment On May 10, 2013, at 5:21 PM, Ustauber wrote:

    This is on the agenda:

    $30.000 Tesla.

    2 hour complete charge.

    1000 miles range.

    What would this do to the car industry.

  • Report this Comment On May 10, 2013, at 6:04 PM, StupidityAlert wrote:

    On what year's agenda, and with how large of a subsidy? It's all about the battery, when you get closer to the mass-mkt, and Tesla has plenty of competition that's already there. They are all working on a better, cheaper battery. Actually, battery company are doing that; the OEMs are at the mercy of their very slow progress in electro-chemistry.

  • Report this Comment On May 10, 2013, at 6:28 PM, kcboy408 wrote:

    Yes, I think Tesla will do well eventually but not any time soon. The problem is long time investment is ok if you consider the aspect of it. I do think Tesla has a thing going but in terms of profit and how many cars they will sell in the future is still a mystery. I will be watching on the sideline as well. Stocks often don't reflect reality first though and will eventually settle to fair value. It is still possible that the stock will continue to go up but once the squeeze runs out, it's very risky to continue buying the stock at the moment.

  • Report this Comment On May 10, 2013, at 6:29 PM, kcboy408 wrote:

    typo. I mean "long time investment is ok if you consider the time aspect of it."

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