tesla ppt, sec focused accounting, pierce mcmanus
DESCRIPTION
This presentation focused upon the SEC based reporting of Tesla's company, where my specific focus resided in the SWOT analysis. I left this area rather sparse so I could elaborate in the presentation itself. I focused upon the issues that Tesla is facing regarding their vertical monopoly, battling state legislature, and acquiring a larger market share via their lower cost cars in production.TRANSCRIPT
Understanding Corporate Annual Reports
GENERAL INFORMATIONLeo Tjakralaksana
Battery Operated Car
• Uses Lithium-Ion2012 super charge
network being providedDesign
• ElegantComfort
• Tablet as command screen
Model S
Sedan
Starting price (69,900)
Roadster
• Sport car-discontinued
• Starting price (59,900)
Model X
• To be released• SUV
• Price is to be announced
ACCOUNTING AND FINANCENick Shmelev
Tesla follows Generally Accepted Accounting Principles.Tesla is audited by Pricewaterhouse Coopers LLC.Tesla uses the straight-line method for :
•Calculating depreciation
•revenues on lease vehicles
• stock based compensations
•development compensation and
costs
• Tesla uses LIFO method to value inventories, which are valued at lower cost of market.
• At the beginning (2007-2008), Tesla had negative stockholders equity.
• However, in 2009 Tesla had positive stock holders equity.
Financial Performance
• Tesla began earning revenue in 2007, selling $73000
worth of powertrains.
• Tesla also earns revenue by selling Zero Emission Vehicle
Credits to other companies.
• Tesla is famous for their electric vehicles, the Tesla
Roadster, Model S, and the soon to be Model X
• However, Tesla had negative operating margins for the
first 3 years.
Financial Disclosures
• Tesla started selling developmental services it provides
to other companies
• Tesla also has future contractual liabilities which are not
noted on the financial statements (Purchase of a facility
and a contract with Lotus)
• Tesla does not pay dividends, and has no intention to do
so in the future
Financial Health
• We have a positive look for Tesla's future.
• Their cars are popular, safe, and are becoming mainstream electric cars
• In 2012 Tesla started to finally generate positive cash flow,
but the company was also increasing it's debt to a projected
$392.5M in 2013.
• The Model S is quickly becoming one the most popular
car on the streets, and is the best electric vehicle out there.
Capital Stock Mie Takahashi
Tesla’s Stock• The Nasdaq Stock
Market LLC since June 29, 2010
• The initial price per stock was 17 dollars.
• It has been increasing since 2012.
• It reached highest price: $252.94 at 3/6/2014
Stock information
It is worth seven times as much as last yearIts total value was over $30 billion (2/25/14)
Preferred Stock
• Authorized: 100,000,000
• Issued outstanding: None
Common Stock• Authorized : 2,000,000.000
• Issued and outstanding: 123,191,938 (January 31, 2014)
• $0.001 par value
• Treasury stocks: None
Strategic or Commercial Relationships
• Daimler AG
Blackstar lnvestco LLC, an affiliate of Daimler, owned 4,867,929 shares of CS
• Toyota
2,941,176 shares of CSat $17.00 per share in July 2010 .
• Panasonic
1,418,573 shares of CS to an entity affiliated with Panasonic at $21.15 per share in November 2010.
Dividends and stock split
• Tesla is not a dividend-paying company.
• No stock split since June 29, 2010
SWOT AnalysisPierce McManus
• Battery Technology
• Proven Sales
• Current monopoly
• Production value/design
Strengths
Weaknesses
• Failing sales model
• Unreliable production
• Limited current growth
• Increasing costs of production
Opportunities
• Acquisition of a lower cost market
• Focus upon foreign sales
• Marketing/Advertising
Threats
• Competition in the market
• State legislation
• Public perception
MARKETINGValeria Gomez
Market description
Tesla can fall under three specific markets:Luxury vehicles
All-electric vehiclesSport cars
Product Review
Model S-Three main options:
•60 kWh
•85 kWh
•85 kWh Performance
Channels & Logistics
• Tesla streamlines the buying process for consumers
• Test drives are “delivered” to customers
• “Tesla Store” marketing platform: 30 stores nationwide
In United States
In Europe
In Asia
Positioning
• Different driving experiences
• Environmentally responsible,
sustainable energy future.
• Fully electric cars at a price affordable to the
average consumer
Product
• The model S as a revolutionary luxury sedan that does not compromise technology, efficiency, style, performance or the environment.
Pricing
• Buying system is unique because it all happens through their website; sells expensive vehicles now with mainstream ambitions
Distribution
• Tesla has changed the dreaded experience of buying a car:
• Galleries in highly populated shopping centers
• Buying experience tailored to costumer’s life schedule
INVEST IN TESLA? Reiner Bennardo Riatan
In 2012:
• Net Loss: $396.213 M
• Cash: ($53.376 M)
“Tesla announced that it achieved profitability in the first quarter of 2013
for the first time in history”- Mashable, April 1 ,2013 -
Tesla’s stock price 2012-2014
$35,000 – 200 miles E Model will come within 3-4 years
How?Why do investors care?
Nasdaq’s recommendation
NEWS & CURRENT EVENTS
Brad Nicholl
Future Factory Plans
• Production numbers of electric vehicles:• 2013: 22,300 units
• 2014 estimate: 40,000 units
• 2020 desired output: 500,000 units
• Lithium-Ion Battery-Supply Shortage• Limited supply of batteries causes limitations:• Sales of Toyota Prius (2009, 2011)
• Preventing expansion
“The Gigafactory” Plan
• A factory to produce lithium-ion batteries will:• Overcome the shortage of lithium-ion batteries
• Reduce costs of batteries by more than 30%
• Costs of the factory:• Between $4 billion to $5 billion• $2 billion from Tesla Motors
• $3 billion from partners
(Panasonic & material suppliers)
through 2020
Factory details and requirements:
• Facility Area: 10 million square feet
• Total Land Area: 500 acres to 1000 acres
• Total Factory Employees: 6500
• Powered by: Solar & wind power
• Transportation (to California) by: Freight train
Possible & ideal locations:
Arizona, Nevada, New Mexico, or Texas
Issuance of Convertible Bonds
What is a convertible bond?• Ability to convert the bond to stock shared• Potential to benefit from an increase in share price
• Share price must be above conversion premium/price• Conversion rate, price, & premium are all directly related
Issuance of Convertible Bonds
• Additional stock issued will dilute the share price
• No interest payments received after conversion
• No maturity (principal) value received if converted
• Allows corporations to offer lower interest rates
• Bonds converted reduce the corporation’s liabilities
• Callable: Corp. generally has power to force conversion
Issuance of Convertible
Bonds• Tesla needed to raise funds to finance the massive
battery factory and expand operations
• Planned to raise $1.6 billion
• Raised $2 billion due to excess demand, issuing:
• $800 million convertible bonds issued @ 0.25% due 2019
• $1.2 billion convertible bonds issued @ 1.25% due 2021
• Details of the convertible bonds:
• Conversion Premium: 42.5% above last reported share price on pricing date (2/27/14 = $252.54)
• Conversion Price: $359.87/share ($252.54 x 1.425)
• Conversion Rate: 2.7788 shares/$1000 bond (1000/359.87)
• Senior Note status: Takes precedence over other debt
Issue With Direct-Sales Method
Direct-sales method• Selling Tesla vehicles
directly to costumers through Tesla dealerships
• Skips the “middleman,” independent dealerships
• Creates a better experience and increased understanding of the Tesla electric vehicles
Issue With Direct-Sales Method
States that have banned Tesla’s direct-sales method:
• Arizona, Texas, & recently New Jersey, with others possibly to join in the future
Why ban direct-sales method?
• Hurts established, independent dealerships
• Fear of similar tactics from foreign automakers
• Campaign money received
from a dealers association
• Solutions to bans on direct-sales method
• Display rooms only
• Limit to cars displayed depending on state law on ban
• Ability to test-drive depends on state law on ban
• Purchasing information cannot be provided
• Customers must purchase via online
QUESTIONS
Prize: Bluetooth
• Which Tesla’s car has been discontinued?
a)Model S
b)Model X
c)Roadster
d)Model E
Prize: Key Finder
• What Type of bonds is Tesla planning to sell?
a)Convertible
b)Debenture
c)Callable
d)Treasury