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Comment by ajross | Hacker News Reader

That credits thing doesn't seem to add up. A quick google shows that 7% of Tesla's 2019 revenue was selling credits. While sure, that's of the same order as the profit, you can't make an argument that "all" of the profit was credits for basic fungibility reasons. "All" of the profit could be any 7% chunk of revenue.

And 7% is like half a year of profits growth in this cases for a company that is still growing rapidly and finding efficiencies.

It's spin, again. And I genuinely don't understand why so much of it continues to be deployed against this company when it keeps proving it wrong.

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It's "literally all" of the profit because Tesla controls the timing and amount of credits sold each quarter, and adjusted the sales of credits so that it could make the "4 consecutive quarters" profitability threshold for making the S&P500 rather than selling them all in one quarter as they did in the past.

Profits are not fungible. Companies can, and do, determine profit and loss separately for each line of business, because it matters both for financial reporting purposes and for tax purposes. Even Tesla acknowledges that it is not profitably making and selling cars under GAAP (i.e., under industry-standard accounting); their unit margin deliberately excludes items that would normally be ratably allocated to each unit. Hell, Tesla even fired most of its marketing department and cut its marketing budget so that it could goose the financial metrics it needed to make the S&P.

In that sense, it worked. Tesla is on the S&P. The downside to being on the S&P though is greater scrutiny and more price friction. Tesla can no longer count on retail investors to goose stock prices with marketing stunts.

What is the upside to being on S&P? What were they on before, Nasdaq? What is the material difference? Genuine question.

Getting investment money from anyone who invests in an S&P500 index. Which is a lot considering how often the S&P500 is considered the default index.

There isn't an upside. Theoretically it means that certain investment vehicles must buy shares of your company. But they do so from the open market; not from offerings.

Otherwise, it's just a matter of prestige: the S&P lists are just the X largest (by stock value) profitable publicly traded companies.

The difference between S&P X00 and Nasdaq: S&P is just a list of publicly traded companies; it is not a stock exchange. Nasdaq is an actual stock exchange, like the NYSE.

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