Showing posts with label TSLA. Show all posts
Showing posts with label TSLA. Show all posts

Saturday, 16 May 2015

NYSE & NASDAQ: what are GAAP and non-GAAP profits?

As a newbie in the US stock market, a first sight at a financial report will often baffle at "GAAP profit" and "non-GAAP profit". What are they?

To start with, Yahoo finance offers a very convenient avenue of looking at the earning release of listed companies in the US. The date and time of the release of the fiscal report are clearly stated (as opposed to KLSE in which you really don't know when will it be released but within 2 months from the quarter end).

For example, this is the Q1 earning of TESLA (NASDAQ: TSLA). 8-K form is the name of form that contains financial results.

TESLA 2015 Q1 Earnings

GAAP stands for Generally Accepted Accounting Principles. It is the standard norms of how companies should present their earnings in NYSE and NASDAQ. In a simple way, what we see on the balance sheet is based on the GAAP profit, i.e. the common way of reporting profit.

However, a company may write-down an asset or restructure its organisation. These actions usually come with large one-time cost that may not be truly reflected in the GAAP profit. As such, a company will also provide “adjusted” earning figures that excludes these nonrecurring items. These effect, usually is one-off, will be regarded in the non-GAAP profit. And because of this, I personally think that it will more accurately reflects the company's performance.

The balance sheet of TESLA:



We see that a GAAP net loss -$ 154 M or $-1.22/share was incurred according to the conventional way of account reporting. After considering compensation expense, non-cash interest expense and deferred profit, its actual net loss is only -$ 45 M or $ 0.36/share, which is significantly less than the GAAP standard way of reporting.

The above exemplifies the use of non-GAAP reporting to account for a more accurate earning which truly reflects the company's performance. There are good and bad with both measures of reporting in the sense that the report could be manipulated to favour the desired outcome. Which one to look at is then completely up to your discretion.

Thursday, 3 April 2014

NYSE&NASDAQ: March options virtual trades

Mar 14 options virtual trades, expired 21 March 2014.

Mar14 virtual trade

1. BAC, return of 33% while the mother share rose 1.2% in that particular period. (magnified power of options, just like call warrants)

2. JPMorgan Chase Co. (NYSE: JPM), advanced US 3++ in 1 week, or 5.93%. I bought the option at $0.98 and it ended up with $3.60. A return of 267% in 1 week time, not bad right? This is the kind of return in US markets.

3. TSLA, a recently hot stock in NASDAQ, where the call option is out-of-money @ strike price of 250, i.e. options expired worthless. A loss of 100% of the capital. 

Not too bad when you are a buyer and you bought at the right trend - unlimited profit and a limited loss of 100%. In real trade I would chose those expire at least 2 months later, so that the price fluctuation will be lower. Still a lot to learn for this financial derivatives.