No. of Recommendations: 16
I thought this was an excellent interview of Jim Chanos.
'At year end 2022, 60% of our portfolio by capital showed some sort of questionable accounting or outright fraud. The biggest fraud is hiding in plain sight which is the misuse of pro forma accounting, in particular in Silicon Valley where companies are adding back all kinds of expenses ' especially equity-based compensation ' to the P&L statement. Uber's CEO was recently crowing about their adjusted profitability, but Uber is actually losing money. Or take GE. They put out a press release on their earnings two weeks ago that had 16 pages of adjustments. So what is the real earnings number? Pro forma accounting is really misleading, particularly when it comes to share-based compensation because of its dilutive nature.'
'Tesla lost money up to 2019, making very expensive cars in California. They opened up their Shanghai factory in 2019, and profits took off. If you look at their 10-K tax disclosure, it looks like all of their profits in 2020 and 2021, and 65% of their earnings in 2022 came from Shanghai. I sort of joked, but seriously, Tesla is a Chinese car company. Therefore, what's happened in China in the last 4 months is significant because Tesla out of nowhere has been overtaken by BYD. BYD is now selling 5x the number of cars in China Tesla is, and they didn't even have any models a couple of years ago. This should be a warning sign to Tesla bulls as it just shows that even the market leader can be overtaken.'
https://themarket.ch/english/jim-chanos-im-not-sur... 