Disrupting Transcripts: Spike In “Deflections” on Tesla’s Latest Call

In our final earnings week blog post discussing our new, machine learning-based transcript Smart Summary™, we’re taking a look at the electric car maker, Tesla. The company reported earnings and held its regular quarterly call after market hours on Wednesday, July 24, 2019. The stock dropped immediately upon the results release, and continued dropping during the call and into the next day.

While every quarter at Tesla has many puts and takes (like international shipments, tax credits, specific model volumes), what really stood out for us when we applied the Smart Summary™ was the really serious increase of “deflection” instances quarter over quarter. Our tweet on the topic got almost 10,000 views in a few hours:

 

So what is “deflection?”

Our new transcript Smart Summary™ tool has two underlying mechanisms. One is based on a specially trained machine learning system in which we, mostly former buysider product managers, trained the system to parse and classify sentences into a large training data set across industries and companies. This tool automated what we used to do during earnings season, and will only get better as our users submit direct feedback. Transcript Classifications are not mutually exclusive; a sentence might often be a Guidance and a KPI sentence at the same time. 

The second mechanism powering Smart Summary™ is natural language processing. We have had overall sentiment reports for management and analyst teams, and keyword surfacing applied to transcripts in the product for a long time. What we’re introducing with the Smart Summary™ is the scoring of specific sentences (positive/neutral/negative) across all Classifications (so a sentence might be “positive Guidance” and “positive KPI” at the same time). The other NLP application is what we call “deflection.” We dug through the academic literature and identified a specific lexicon that has shown to lead to future negative corporate events. 

Looking at the Deflection summary view in the Tesla call, we see quite a bit of the usual enthusiasm and grand visions from CEO Elon Musk.

We see the recently appointed CFO discussing the challenges in the quarter-to-quarter business:

It was most interesting to us that the remarks by the outgoing CTO (a surprise departure) were also picking up as deflection:

The final statement on the call by the CEO was also marked as deflection: will Tesla beat the industry economics?

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