Elon Musk’s vision for a utopia powered by Tesla robotaxis and the company’s humanoid robot, Optimus, may come with a hefty price tag. A recent report revealed that Tesla spent $6.3 billion in capital expenditures (capex) during the second half of last year, but the gross value of its relevant assets only increased by $4.9 billion.
The discrepancy between the two amounts has raised concerns about internal controls at Tesla, with some accounting experts suggesting that there may be plausible justifications for the variance. According to Tim Morrison, an accounting professor at Notre Dame and former audit partner at Ernst & Young, foreign currency changes could explain a significant chunk of the gap.
However, Morrison also noted that foreign exchange is not the only possible explanation, as Tesla could have disposed of assets that had reached the end of their useful lives. He pointed to the possibility of companies disposing of fully depreciated assets and writing them off from the balance sheet.
Despite the concerns, some experts believe it may not be time for investors to sound an alarm just yet. With Tesla sitting on a $36.5 billion cash pile and not paying a dividend, borrowing $3.9 billion in new debt last year may seem reasonable for a company banking on future growth.
Tesla shares have lost roughly half their value since their post-election high near the $490 mark in December, but bulls still believe that Musk’s investments will pay off in a big way. The stock trades at roughly 90 times the company’s projected earnings for the next 12 months, according to S&P Cap IQ estimates.
As Tesla continues to push forward with its ambitious plans, investors and analysts will be watching closely to see how the company accounts for its expenses in the future.
Source: https://finance.yahoo.com/news/tesla-1-4-billion-seems-111300909.html