SEC Form 10-Q / 8-K Footnote Methodology
U.S. Downstream & Macro Cross-Check · Accounting & Footnotes
·
Published 2026-10-31 (4 min read)
3Q26 Filing Footnote Audit: Stripping Tariff Refunds, SBC, Buyback Tranches & N2 Ramp Dilution
SO WHAT? · VALUATION ESTIMATE & 6–12M DIRECTION
On Footnote-Adjusted Core Earnings (Ex-Tariff Refunds & SBC), TSMC & SK Hynix Screen Cheaper While Tesla Screens Richer
✓ Multi-Agent 3-Round Verified
SPLIT VALUATION
▲ BULLISH TSMC·Hynix / ▼ CAUTIOUS Tesla
● UNDERVALUED
● FAIR VALUE
● OVERVALUED
STEP 1 · FOOTNOTE FACT
Tesla GAAP OP ($718M) turns negative ex-$739M tariff refund; TSMC prints 58.7% OPM despite N2 D&A
→
STEP 2 · VALUATION ESTIMATE
Quality-adjusted multiples: SK Hynix (4.17x Fwd P/E) & TSMC (26.97x P/E) Undervalued; Tesla (370x) Overvalued
→
STEP 3 · 6–12M DIRECTION
▲ BULLISH on high cash-earnings quality (Hynix, TSMC, GOOGL) / ▼ CAUTIOUS on footnote-inflated beats
| Issuer & Live Multiples | Valuation Estimate | 6–12M Direction | So What? (Valuation Basis & Catalyst) |
|---|---|---|---|
| TSMC & SK Hynix (High Quality) TSMC P/E 27.0x · Hynix Fwd P/E 4.2x (Clean Core OP) | UNDERVALUED | ▲ Bullish | 59%–80% OPM achieved after absorbing full leading-edge D&A — genuine deep value |
| Tesla (Footnote-Boosted OP) Reported P/E 370.1x · Core OP -$21M Ex-$739M Refund | OVERVALUED | ▼ Cautious | Headline margin rebound relied on Note 11 tariff refunds, leaving core multiple stretched |
Headline 3Q26 tables vs. filing footnotes: separating one-time tariff refunds (Tesla Note 11), non-cash SBC ($1.165B), buyback double-counting traps (SK Hynix), and fab ramp depreciation (TSMC) [1][2][3][4].
As of 2026.10.29 · Source: Tesla 3Q26 Form 8-K & 10-Q, SK Hynix & TSMC 3Q26 Releases · Derived ratios marked (Calc.).
1. Footnote Check 1 — Strip Prior-Period Tariff Refunds (Tesla Note 11)
- Reported vs. Adjusted Margin: Tesla reported 3Q26 ex-credit Auto GPM of 18.1% (vs. 16.3% in 2Q26, 15.4% in 3Q25) and Energy GPM of 33.1% [2]. Form 10-Q Note 11 discloses Feb 2026 Supreme Court IEEPA tariff refunds cutting Auto COGS by $260M and Energy COGS by $526M, minus a $339M Energy customer refund deducted from revenue [1].
- Arithmetic Reversal (Calc.): Backing out those one-offs lowers ex-credit Auto GPM to ~16.8% and Energy GPM to ~23.8% [1][2].
| Checklist Item | Figures Verified in 3Q26 Filings |
|---|---|
| One-Time COGS & Revenue Adjustments | Tesla 10-Q Note 11: IEEPA tariff refund reduced Auto COGS by $260M and Energy COGS by $526M; customer refund obligation reduced Energy revenue by $339M |
| Reported vs. Ex-Refund Margins | Tesla ex-credit Auto GM: 18.1% reported vs. ~16.8% ex-refund (Calc.) / Energy GM: 33.1% reported vs. ~23.8% ex-refund (Calc.) |
| Accounting Profit vs. Cash Flow | Tesla GAAP operating income $718M, stock-based compensation $1.165B, operating cash flow $6.263B, free cash flow +$1.531B |
| Income Statement vs. Balance Sheet Cash | SK Hynix operating profit 83.33T KRW, net profit 39.78T KRW, ending cash 114.5T KRW (+26.5T KRW QoQ), net cash 98.7T KRW |
| New Fab Initial Dilution | TSMC gross margin 66.4% (-1.3%p QoQ on initial 2nm ramp); overseas fab dilution guided at ~2%p in 2026 and 3–4%p thereafter |
| Separating Shareholder Return Tranches | SK Hynix FY26 return target ~100T KRW (incl. 40T KRW completed buyback); 3Q board resolved 14T KRW dividend + 20T KRW buyback (10T cancel / 10T employee comp) |
2. Footnote Check 2 — Reconcile GAAP OP to OCF & Track SBC Dilution
- $718M GAAP OP vs. $6.263B OCF: Tesla's 3Q26 GAAP OP was $718M (2.6% OPM), but adding back $1.165B of SBC (up from $663M YoY) plus D&A and working capital lifted OCF to $6.263B—funding $4.732B of 3Q CapEx ($13.01B in 9M26) and leaving +$1.531B FCF [2]. Track the $1.165B SBC separately as an equity dilution cost.
3. Footnote Check 3 — Separate Cancellation vs. Wage Buyback Tranches (SK Hynix)
- Profit vs. Cash vs. Return Tally: SK Hynix 3Q26 OP hit 83.33T KRW (80% OPM) while Net Profit was 39.78T KRW (38% margin); cash rose +26.5T QoQ (88.0T → 114.5T KRW) and debt fell -2.8T QoQ (18.6T → 15.8T KRW) → Net Cash 98.7T KRW [3].
- Avoiding Buyback Double-Counting: The ~100T KRW FY26 shareholder return target (≥50% of FCF) already includes the 40T KRW Aug buyback. In 3Q26, the board newly resolved a 14T KRW dividend + a 20T KRW treasury acquisition—explicitly splitting the 20T into 10T KRW for cancellation (in the return total) and 10T KRW for employee compensation (excluded) [3].
4. Footnote Check 4 — Quantify New-Fab Depreciation Dilution Upfront (TSMC)
- N2 & Overseas Fab Dilution Bands: TSMC 3Q26 GPM dipped -1.3pp QoQ (67.7% → 66.4%, inside the 65%–67% guide) as 2nm reached 8% of wafer sales; 4Q26 GPM is guided to 65%–67% (66.0% midpoint, -40bp QoQ), with overseas fab dilution quantified at ~2pp in 2026 and 3–4pp/yr thereafter [4].
Takeaway & Next-Quarter Checks
- 3-Point Follow-Up: (1) TSMC 4Q26 GPM vs. 65%–67% band; (2) Any repeat tariff/rebate entries in Tesla's 4Q footnote; (3) Tesla quarterly SBC trajectory vs. $1.165B.
Sources
- Tesla Q3 2026 Form 10-Q (SEC EDGAR, Note 11), 2026.10.22.
- Tesla Q3 2026 Update (SEC Form 8-K Exhibit 99.1), 2026.10.21.
- SK Hynix 3Q26 Business Results Press Release, 2026.10.28.
- TSMC 3Q26 Earnings Conference Transcript, 2026.10.15.
This note is a personal analysis record and is not investment advice or a solicitation to buy or sell any security. Investment decisions and responsibilities rest with the reader.
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