What can inventory numbers tell about Tesla?

teslaWe talk a lot about importance of inventories in class, and here is another example, this time coming from Tesla Motors. Their sales are up, to everybody’s cheer, but inventory numbers paint a bit of a dimmer story. Their days of supply inventory is growing steadily which could indicate slowing demand for their cars. The story speaks volumes about importance of inventory numbers (to ops folks and investors alike), and their breakdown – while growing finished goods inventory maybe alarming of slower demand, growing raw materials may suggest that company is betting on future growth. In the Tesla’s case it seems to be the finished goods inventory.

Source: http://www.wsj.com/video/tesla-delivery-numbers-dont-tell-full-story/31D34EE8-DD7D-4485-8DC9-672B9C92DD9A.html

 

 

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2 thoughts on “What can inventory numbers tell about Tesla?

  1. Until this article I hadn’t really considered the difference in inventory between finished goods and raw materials so telling of a companies financial state. It is so interesting that if the growth in inventory were due to more raw materials, investors would see that as an investment in the future. However because this growth in inventory is made up of many finished products, Tesla may have forecasted too high of a demand during these past few quarters.

  2. As a member of the GIMG team, we were thinking about investing in Tesla because of it’s strong fundamentals and positive outlook. However, after researching more about this company, there are many accounting methods that can make company statements looks better. This article delves deeper into Tesla’s building inventory and production rate as well as its declining utilization rate. I really like this article because of the numerical breakdown.

    http://seekingalpha.com/article/2958776-has-tesla-just-recognized-it-also-builds-to-inventory

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