SEC didn't like how Tesla was reporting its earnings

There's a reason why Tesla got rid of its non-GAAP numbers.

If you've been paying attention to recent Tesla earnings calls, you may have noticed that the electric automaker has stopped with the "non-GAAP" phrasing in favor of "GAAP." The last time that Tesla used non-GAAP numbers was in August. For the company's next quarterly release ( in October), it shifted totally to GAAP numbers. If you don't know what those phrases mean, you're not the employee at the SEC that had a problem with Tesla's used of these terms. For everyone else, here's what's going on.

"GAAP" stands for "generally accepted accounting principles," and, well, "non-GAAP" means doing things that are not generally accepted. As you might expect, GAAP is the standard because it puts everyone on a level playing field. But for years, Tesla has used both GAAP and non-GAAP numbers in its reports, and that's what the Securities and Exchange Commission told Tesla to stop doing. The SEC said that Tesla was using prohibited non-GAAP "accounting metrics" ( as reported by The Wall Street Journal) that were "individually tailored." The SEC sent Tesla a series of letters describing the issues and now considers the matter resolved, the WSJ says. The SEC has been cracking down on non-GAAP numbers across the board, so don't expect Tesla to revert to its old methods in the future.

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