This guy thinks so.

https://finance.yahoo.com/news/facebook-cofounder-says-tesla-committed-135001013.html

Quote:

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Amidst a chaotic month for Tesla - even by its continuously plunging standards - Facebook cofounder and multi-billionaire Dustin Moskovitz has made some pretty dire predictions for the automaker, accusing it of committing "consumer fraud on a massive scale."

"This is Enron now, folks," Moskovitz wrote on Threads, referring to the corporation that went bankrupt in 2001 after it was exposed for one of the biggest accounting frauds in history. "It may keep going, but people are going to jail at the end."
…
The point of the side-by-side is this: according to Moskovitz, the automaker is wrongly recognizing its deferred revenue - revenue for a product that hasn't been delivered, like an annual subscription fee - as earned revenue through the wider release of its Autopark feature last month. This is a sketchy move, Moskovitz claims, because an earlier version of Autopark was already released with FSD years ago, resulting in inflated numbers.

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Yeah, another attack on the company. But this one has some legs maybe. It's generating a lot of attention. If their accounting is way off, it could have serious consequences.

OTOH they hate Elon so hard to tell if the charges are as bad as they make them out to be.

In reply to fightingfarmer09

fightingfarmer09 said:

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techno-ag said:

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This guy thinks so.

https://finance.yahoo.com/news/facebook-cofounder-says-tesla-committed-135001013.html

Quote:

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Amidst a chaotic month for Tesla - even by its continuously plunging standards - Facebook cofounder and multi-billionaire Dustin Moskovitz has made some pretty dire predictions for the automaker, accusing it of committing "consumer fraud on a massive scale."

"This is Enron now, folks," Moskovitz wrote on Threads, referring to the corporation that went bankrupt in 2001 after it was exposed for one of the biggest accounting frauds in history. "It may keep going, but people are going to jail at the end."
…
The point of the side-by-side is this: according to Moskovitz, the automaker is wrongly recognizing its deferred revenue - revenue for a product that hasn't been delivered, like an annual subscription fee - as earned revenue through the wider release of its Autopark feature last month. This is a sketchy move, Moskovitz claims, because an earlier version of Autopark was already released with FSD years ago, resulting in inflated numbers.

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Yeah, another attack on the company. But this one has some legs maybe. It's generating a lot of attention. If their accounting is way off, it could have serious consequences.

OTOH they hate Elon so hard to tell if the charges are as bad as they make them out to be.

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That is embarrassing.

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At least he used company assets and not a competitor's.

In reply to Fightin_Aggie

Fightin_Aggie said:

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Enron took expenses and capitalized them as assets.

Then pumped up their expenses.

Is Tesla doing that?

The way they are recognizing revenue doesn't seem the same

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I also recalled them booking estimated future profits before the profits actually happened. And then if they were wrong about the estimate or if it turned out to be a loss they had another mechanism for hiding that fact.

Or something like that.

The difference here as I understand it is they have the cash from selling the auto drive package and this is an issue of when they can recognize that cash on their balance sheet.

"Tesla said total sales included revenue from earlier sales of its FSD option. The release of a feature called Autopark in North America allowed the company to recognize the deferred revenue."

In the case of Enron, they recognized revenue from projects based on forward models that were wildly inflated. In other words, they didn't have the cash for that revenue while Tesla has the cash and is just now recognizing the earnings. It does give Tesla a "rainy day account" they can try to pull from to level out sales when they disappoint like last month.

I won't say Tesla won't go bankrupt but it is a totally different situation than Enron.

From what I can gather, Enron essentially turned from an energy company into a trading company. The emphasis behind their trading was cash and cash availability was tied, in some way, to their stock price. As it rose, they could acquire more and more cash and make more trades, thus money. Without the cash, they couldn't make trades or revenue.

At some point in late 2000 and/or early 2001 they made some sort of a deal with Blockbuster (streaming service perhaps) that, I believe, spanned 20 years but accounted for it in 1 year using a creative accounting technique. This allowed their stock price to go up, but it was short lived because for whatever reason, the deal terminated inside of a year. They had to back out all of that accounting that made the price go up and lost their ability to make money going forward. Thus, the stock price fell on the deal collapse, then fell more, and then more and more.

Was there fraud? Almost certainly. Were they just going into QuickBooks and totally making up figures and trying to sell those to Wall Street? I wasn't there, but I don't think so. It seems to me, it was sort of like a contractor lined up a bunch of jobs that he needed a truck for, lied to the dealership to get a truck, took deposits on the jobs and took delivery of the truck, then the finance company came and got the truck, making him unable to complete the jobs. He couldn't do the jobs and had already spent the deposit money, so had nothing to return to people who paid him and no way to do other jobs.

It was way more complicated than that, and again, fraud was involved, but I'm not sure everyone involved was a crook.

What this has to do with Tesla I have no idea. We can see the number of Teslas sold each month and it isn't tied to their stock price.

No. The answer is no.

In reply to Fightin_Aggie

Fightin_Aggie said:

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Enron took expenses and capitalized them as assets.

Then pumped up their expenses.

Is Tesla doing that?

The way they are recognizing revenue doesn't seem the same

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That was Worldcom, not Enron.

Enron was (legally and within US GAAP rules at the time) was moving liabilities into Cayman SPVs to get them off their balance sheet.

In reply to Central Committee

Central Committee said:

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Fightin_Aggie said:

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Enron took expenses and capitalized them as assets.

Then pumped up their expenses.

Is Tesla doing that?

The way they are recognizing revenue doesn't seem the same

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That was Worldcom, not Enron.

Enron was (legally and within US GAAP rules at the time) was moving liabilities into Cayman SPVs to get them off their balance sheet.

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They also used mark-to-market accounting to bring forward "projected profits" that were totally made up to fit their quarterly numbers. They also did a number of really bad sale lease backs just to recognize the income from the sale but the effective financing on the capital lease was 15%+ in many cases.

I attempted to start a second company with one of his key accountants before she took the job but she turned me down to fly around with his inner crew.

If she circles back to me I would sell.

In reply to techno-ag

techno-ag said:

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"This is Enron now, folks," Moskovitz wrote on Threads

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Uh huh.

He's trying to draw some comparison with Enron's mark-to-market accounting, but Enron's deal was mainly with non-consolidated debt through SPEs.

Here's an article so you can see what Enron did and see if the comparison is valid or not:

http://archives.cpajournal.com/2002/1202/features/f122002.htm

In reply to ktownag08

ktownag08 said:

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PwC performs their audits, and I doubt they'd let them do something materially incorrectly or not allowable.

Not saying it hasn't happened before obviously, but doubt it.

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All I'll say, is Arthur Andersen audited Enron and Worldcom.

Times have changed in the accounting world since then, but accounting firms can only offer an opinion on what they can see.

In reply to Beat40

Beat40 said:

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ktownag08 said:

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PwC performs their audits, and I doubt they'd let them do something materially incorrectly or not allowable.

Not saying it hasn't happened before obviously, but doubt it.

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All I'll say, is Arthur Andersen audited Enron and Worldcom.

Times have changed in the accounting world since then, but accounting firms can only offer an opinion on what they can see.

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And with high enough fees, they might not wear corrective lenses. I witnessed the incompetency of AA with an oil and gas company I worked for. The wool was pulled over their eyes on a matter they saw, but did not question nearly enough. But it didn't ever blow up in their face.

Guy made billions off of being at the right place at the right time with Facebook and has subsequently made it his life's ambition to build a better to do list for businesses.

Elon the GOAT can only go up.

Libs owned.

Next Enron? Who knows… but… Tesla is pretty well known in the forensic accounting circles not for fraud but for a significant amount of anomalies that are pretty hard to explain and have been for years now.

They've had some controversial reserve releases for recognition like this in the past. One I recall is when their warranty reserve per vehicle magically shrunk by like 30% over a year or so right before COVID.

Next I expect someone to outlandishly claim SpaceX isn't actually capable of launching rockets/payloads into orbit.

I'm not a fan at all of EV's but I am pretty damn sure TSLA is a company that has/will have the funds to continue to operate/produce products.

As Cathie Wood states, Tesla is the biggest AI project on Earth https://t.co/yaWq1j6fEd

— Elon Musk (@elonmusk) April 28, 2024

Well, OP is the resident Tesla Hater so not surprised he combs the net for anything Anti Tesla without even doing a 5 minute search.

Just a little research shows Tesla has about 29B cash on hand.

Does Tesla have a high debt ratio?
Tesla's long-term liabilities include long-term debt, operating leases, deferred revenue, warranty reserve, etc. Tesla's total long-term liabilities comprised only 0.2X or 20% of its equity, a significantly low ratio.

If you want to talk about being close to bankruptcy,

Ford Motor Debt to Equity Ratio: 3.485 for March 31, 2024

In reply to DDub74

DDub74 said:

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If I was a betting man, I would think Facebook would be the next Enron before Tesla or Musk's other companies. Musk creates things. Do people still get on Facebook?

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their user growth has to be flat at best and most likely negative. What is the average age of a Facebook user now? 50?

At the End of the Day TESLA is a car manufacturer. It has always been the case that TESLA would almost certainly trade at a multiple comparable to other car companies. It might take 10 years or 10 months but eventually TESLA should trade at P/E comparable to Toyota Ford Nissan etc

Two businesses I wouldn't be a shareholder are car manufacturers and airlines

In reply to Sq 17

Sq 17 said:

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At the End of the Day TESLA is a car manufacturer. It has always been the case that TESLA would almost certainly trade at a multiple comparable to other car companies. It might take 10 years or 10 months but eventually TESLA should trade at P/E comparable to Toyota Ford Nissan etc

Two businesses I wouldn't be a shareholder are car manufacturers and airlines

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Agreed. It's a car maker posing as a technology company. People have bought that line for years, btw, but recent sales slump belies the claim.

And I'm a fan of Elon and hope he and his companies do well. Not a fan of EV mandates, which some leftists on here misconstrue as "hate."

In reply to techno-ag For a person who claims to be arguing against leftists you sure do push a metric ton of their propaganda. This thread being a great example. You don't even realize that you're doing it.

You would be absolutely stunned by the amount of Biden bashing that happens from accounts on YouTube/X that focus on Tesla.

In reply to Sq 17

Sq 17 said:

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At the End of the Day TESLA is a car manufacturer. It has always been the case that TESLA would almost certainly trade at a multiple comparable to other car companies. It might take 10 years or 10 months but eventually TESLA should trade at P/E comparable to Toyota Ford Nissan etc

Two businesses I wouldn't be a shareholder are car manufacturers and airlines

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I used to think that but really, the AI stuff is pretty different.