When Tesla announced first-quarter revenue of $5.98 billion, there were two important points. First, the company had beat consensus analyst expectations. But more remarkably, the company was somehow profitable, despite automobile sales dropping over $1 billion. Investors reacted to this surprise performance; during after-hours trading on earnings day April 29th, 2020, Tesla stock jumped from ~$800 to as high as ~$857. But after just two days, Tesla stock is back to ~$707 at the time of this writing. So, what happened?
Hedge fund manager questions Tesla’s accounting practices
On April 30th, 2020, Greenlight Capital founder David Einhorn took to Twitter to ask Elon some questions and express concerns. “This quarter your production was lower and split over two factories, affecting cost absorption particularly in Fremont,” he mentioned.
He adds: “Your mix had fewer high margin Models S/X. You ramped up Model Y. Both factories were interrupted, driving up costs. And though you didn’t discuss it, currency should have hit your margin by 2-3% compared to last quarter. All of these factors appear to be headwinds to your auto gross margin (excluding regulatory credit sales) — which barely budged,” he added.
What he’s talking about is this figure, which shows that Tesla’s automotive gross margins are actually up a little since Q4 2019:
Following Einhorn’s tweet, posted at 7:10 AM PST on April 30th, Tesla stock dropped about $100 throughout the day, from ~$857 to ~$761 in after-hours trading.*
Elon’s tweet today
While bulls are confident in Tesla stock, Elon took to Twitter today to express otherwise:
“Tesla stock is too high,” he opines at 8:11 AM PST on May 1st, 2020. Following the tweet, Tesla stock dropped about $50 to as low as ~$703.
Some Twitter users, who are invested in Tesla stock, allegedly lost thousands of dollars due to the tweet:
For instance, user Elvis allegedly lost $10,000.
*Note: it is unclear what portion of the price drop can be attributed to the accounting concerns.
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