Accounting Fraud Much?

It appears that Tesla somehow managed to misplace $1,400,000,000.00 in capital expenditures.

I'm thinking that some of it may have made its way to various conveniences at the Musk family compound outside of Austin.

As Tesla’s car sales and share price plummet in response to Elon Musk’s political and physical stances, we would like to draw readers’ attention to something puzzling in the group’s accounts.

Compare Tesla’s capital expenditure in the last six months of 2024 to its valuation of the assets that money was spent on, and $1.4bn appears to have gone astray.

The sum is big enough to matter even at Tesla, and comes at a moment when attention is returning to the group’s underlying numbers, now that its fully diluted stock market valuation has crashed from $1.7tn to below $800bn.

A closer look at Tesla’s cash flow statement may also prompt investors to ask other questions, such as why a business with a $37bn cash pile raised $6bn of new debt last year?

First, consider the apparent anomaly. Tesla is investing heavily, particularly in AI infrastructure. It intends to spend at least $11bn in each of the next few years, aiming to take advantage of opportunities in robots, computing and batteries.

Looking at last year, in the third and fourth quarter combined, Tesla spent $6.3bn on “purchases of property and equipment excluding finance leases, net of sales” according to its cashflow statements.

Over on the balance sheet, however, the gross value of property, plant and equipment rose by only $4.9bn in that period, to $51bn. Note seven to the financial statements has the breakdown:


………

Tesla reports the gross figures and the accumulated depreciation, so we can see how the net figure is arrived at. It didn’t disclose any sales or “material” asset impairments that would account for the missing $1.4bn, and we’re sure auditors PWC would be alive to the important signal such declarations of mal-investment would send.

Foreign exchange seems unlikely to explain the gap either. Tesla makes cars in the US, China, and Germany, and while the euro did weaken against the dollar in the periods, four-fifths of Tesla’s “long-lived assets” are in America. See note 17, for those reading along:



Tesla’s gap is also unusual by its own standards. Here’s a chart of capital expenditure on PP&E vs the change in gross value of those assets for every quarter since the start of 2019:



A positive number indicates that the balance sheet value of assets rose by more than capex. Aside from 2021, when there was a $1.3bn rise in the value of the assets, the variance has tended to even out and has not approached the scale of the last quarter.

Such anomalies can be red flags, potentially indicative of weak internal controls. Aggressive classification of operating expenses as investment can be used to artificially boost reported profits.

(emphasis mine) 

OK, it could be money to the Musk compound AND accounting tricks to boost the profit numbers in order to slow the collapse of Tesla stocks.

In either case, this is beginning to sound like some Enron sh%$ is going on.