On Tesla filings: accident or not?

October 23, 2020

Here at footnoted, we’ve been looking at filings for a long time. So it’s a safe bet that when we say something in a filing is unusual, we mean it. What we don’t typically know is whether it’s on purpose or not.

That’s exactly what we thought after reading Tesla’s earnings release on Wednesday afternoon. This is not about the company’s numbers. To be honest, there’s so many people looking at Tesla’s numbers that it’s hard to imagine we would find anything revelatory in them.

Instead, what struck us was that the filing appeared to be a scan of a PDF. Why does that matter? Because it makes it pretty hard for a machine to read the filing. Even stranger was that when we went to look at their language on forward-looking statements and non-GAAP income, it was impossible to copy and paste the text to compare the language, or black-line it.

A quick scan of Tesla’s filings shows that the company started doing this a year ago. The second quarter of 2019 was the last time that their earnings were regular text, as opposed to a scan of a PDF.

We tried by downloading the filing directly from Tesla’s investor relations site and we tried it in different browsers but it was the same each time: it was impossible to grab the entire chunk of text. We were only able to grab the highlighted language (see below). We checked with a few people we know and one of them — Mike Puangmalai, who tweets under the handle @NonGaap — said the text appeared to be in several different fonts.

Now some people might argue that what a company says in its forward-looking statements and description of non-GAAP income doesn’t really matter. But we’re not one of those people, even for a company like Tesla. Maybe even especially for a company like Tesla.

After a fair amount of work, which involved manually typing in the language that couldn’t be highlighted, we found a number of seemingly significant changes between the second and third quarters of this year. We use the word seemingly because we don’t follow Tesla. But presumably people who do follow the company might want to look at this more closely.

Two things that jumped out at us was new language about the need for Tesla to “maintain public credibility and confidence in our long-term business prospects” and other new language about its “ability to procure (sic) supply of battery cells, including through our own manufacturing”.

One of the cardinal rules of footnoted is that there are no accidents in SEC filings. So it’s hard to imagine that a company as sophisticated as Tesla simply made a mistake for the past three quarters. It seems more likely that this was a deliberate attempt to make it much harder to compare the language in filings from one quarter to the next.

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