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Tesla is going to churn out fewer Model S sedans in the near term and reported a profit and a loss for its most recent quarter.

It’s easy to get caught up in the wave of euphoria that is Tesla Motors, especially when they’re bucking the odds by producing viable, stylish and high quality electric vehicles and making money while doing it. One can forget, ahem…to look a little closer at what’s being reported.

The Palo Alto, California-based EV maker with the perpetually higher-than-expected stock price reported that its earnings for the third quarter were up two cents a share. That’s great news considering the company wasn’t expected to make any money.

However, some – mostly us – overlooked the quirk that is Tesla and its reporting practices. Tesla stubbornly clings to reporting non-GAAP numbers whereas the rest of the world uses GAAP results. When you look at the GAAP, short for Generally Accepted Accounting Principles, figures, which Tesla did provide further down in the letter to its shareholders the numbers don’t look so rosy.

“(Tesla’s) Q3 non-GAAP net income was $3 million, or $0.02 per share based on 142.7 million diluted shares, while Q3 GAAP net loss was $75 million or $(0.60) per share, consistent with our guidance even with the additional one-time items.”

Non-GAAP revenue was $932 million for the quarter, up 55% from a year ago, while GAAP revenue was $852 million.

What’s the difference between the two one might ask? Well, overly simplistically, non-GAAP reporting is akin to telling someone you made $50,000 last year because, well, that’s what your gross salary is. GAAP reporting is like telling everyone you made $36,000 because that’s what actually ended up in your bank account after all of the deductions from your checks all year long.

(Tesla confounds analysts by turning a profit. For more, Click Here.)

Tesla does have a rationale for using non-GAAP numbers and it explained it in the letter reporting its third quarter earnings to its shareholders and signed by Elon Musk, the company’s founder and chairman, and Deepak Ahuja, Chief Financial Officer.

(Click Here for details about why gas prices continue to fall.)

“As usual, this letter includes non-GAAP financial information because we plan and manage our business using such information,” the letter states. “Our non-GAAP financial information excludes non-cash stock-based compensation and interest expense, and includes deferred revenue and related costs for cars sold with a Resale Value Guarantee or similar buy-back program where we receive cash upon delivery.”

(To see why NHTSA continues to push Honda for information about Takata, Click Here.)

Regardless of the accounting used and despite providing guidance that it would produce 33,000 Model S sedans compared with its predicted 35,000 units, the company’s stock price is up in mid-afternoon trading. It opened the day at $234.49 a share and rose more than 5% to more than $242 a share.

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