by Jim Woods | March 4, 2013 2:01 pm
It’s almost never a good thing when a company announces that it will delay filing its annual report, or 10-K, with the SEC. Many times, a delayed release is the sign of a red flag for investors and can cause a quick U-turn for a stock.
Well, luxury electric vehicle maker Tesla Motors (NASDAQ:TSLA) just made such an announcement, admitting that mistakes were made in how the company accounted for certain capital expenditures.
Fortunately for Tesla and its shareholders, the company was quick to make very clear that the accounting errors would not affect the numbers it recently released on Feb. 20. The company said its income statement, including cash on hand and free cash flow, would not be altered in the reinstated balance sheet. Tesla says it plans to file its 10-K by March 11.
Based on Wall Street’s reaction to the Tesla announcement, the accounting issue are … well, not an issue. As of midday Monday trade, TSLA shares were up more than 2% on a day in which the major averages all traded in the red.
My early take on this situation is in agreement with traders, as I don’t suspect that there is anything materially negative in the upcoming restatement. From the company’s SEC filing announcing the 10-K delay:
“Tesla Motors, Inc. was unable to timely file its Annual Report on Form 10-K for the year ended December 31, 2012 because a probable error in the presentation of certain non-cash items relating to capital expenditures on its consolidated statements of cash flows was identified during the final review of the Form 10-K. As a result, Tesla could not complete its financial closing process prior to March 1, 2013.
It is important to note that this will have no impact on previously reported total cash and cash equivalents, consolidated income statements, consolidated balance sheets, or free cash flows (defined as cash flow from operations less capital expenditures), including those reported in our earnings release on February 20, 2013.”
The underlined phrase here — “no impact” — is the key to this restatement, and unless we discover next week that there really has been an impact on the previously reported numbers, this announcement won’t even amount to a tiny speed bump in Tesla’s Q4 road.
As I said recently in an article titled, “The Street Unplugs Tesla; Now, Buy the Stock,” the share-price dip that took place after the Feb. 20 should be viewed as a buying opportunity in the stock. Well, nothing that I’ve seen today from Tesla and its announcement to delay the 10-K has altered that thesis in the least bit.
Tesla makes a fantastic niche product that its well-heeled customers have to wait months to get their hands on. For investors looking to ride a leading edge auto/alternative energy company, now is still a great time to climb into the TSLA driver’s seat.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.
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