Whether you’re considering investing in Tesla shares, or just want to learn more about the company, you’ll want to read this article. It’s packed with information about Tesla’s recent progress and what to expect from the company in the future.
Shares are worth 250-dollars
Buying shares of Tesla is not for the faint of heart. This isn’t to say that you should not invest. It’s a matter of understanding the company, what it does and the competition it faces. There’s a lot to be said for owning a stock of a company that has an eye-popping balance sheet and a strong track record of delivering value to shareholders.
Tesla is one of the most recognizable Silicon Valley tech companies. It’s a public company so it has to report its annual and quarterly financial results, which are usually available on the company’s investor relations page. You can also find this information in the company’s SEC database.
There’s no doubt that the upcoming Tesla 3-for-one stock split will make the company more accessible to ordinary investors. It’s also possible that the company may be pumping money into SpaceX, a private aerospace company founded by Tesla co-founder Elon Musk.
One of the best things about owning shares of a storied company like Tesla is that it’s relatively inexpensive. In fact, some brokers offer fractional shares. The company is known for its innovative products and a slew of new factories in Texas and Berlin.
When buying shares of Tesla, make sure that you take the time to do your research. Some brokers offer pre-market and after-market trading, so you can buy and sell your shares at the best possible prices. If you don’t have time to read up on the company, you can also consult with a third party evaluator to get a comprehensive analysis.
You may want to put some of your hard-earned cash towards a retirement fund or an emergency savings fund. This is not a great time to be investing in a volatile stock like Tesla.
Market cap has gone from $1.2 trillion to $574 billion
During a recent trading session, Tesla’s market cap reached $574 billion, less than half of the $2.5 trillion that Apple (AAPL) has in its coffers. It also surpassed the market capitalizations of several other large technology companies.
The company has been making a lot of strides in production in the last decade, selling more than 500,000 cars worldwide last year. In fact, it has surpassed Toyota (TM) and BMW (BMWG) as the world’s largest EV manufacturer. Its production capacity is growing and it expects to deliver 900,000 vehicles in 2021.
The market value of Tesla has sunk to less than half of what it was a year ago. Its market cap has dropped by about $700 billion in the last 12 months, which is comparable to the declines of several high-flying stocks in the face of a recession and rising interest rates.
The company has also seen its stock price drop by 53% this year. This trough reflects a wider exodus from growth stocks. The automaker is one of several automakers to have a market cap below $500 billion. Some investors are dubious about the value of Tesla’s new Twitter (TWTR) acquisition, fearing that it will detract from the company’s focus. The company has already laid off thousands of employees and is planning to lay off more.
In the past year, Tesla’s market cap has dropped by nearly $670 billion. That’s almost as much as Warren Buffett’s Berkshire Hathaway (BRK.B) has lost in the same period. In fact, the company’s market cap has fallen nearly as far as the combined market caps of Coca-Cola (KO) and PepsiCo (PEP), which have lost about $1 billion each.
Despite the recent decline, the company’s market cap is still above the combined market caps of all 11 of the largest global automakers. The company also has a large presence in China, where its Model 3 has been the best selling EV on the market.
Tesla’s annual revenue could exceed $1 trillion by 2030
EV leader Tesla’s market cap hit the trillion-dollar mark following its post-earnings rally. This valuation augurs a lucrative EV bonanza for the company. But to get there, Tesla would need to make 15 to 20 times as many vehicles as it sells now, and it would need to ramp up production by several orders of magnitude. It would also need lots of fresh financing.
Tesla has the highest automotive gross profit margin among the major automakers. The company has a history of scaling production to meet demand. But Tesla faces some tough competition from large OEMs. They are investing billions in the EV market and have provided specific goals for future EV production.
The IEA forecasts that 26 million EVs will be sold worldwide by 2030. In the first quarter of 2022, EVs represented only 10 percent of all vehicle sales. AlixPartners estimates that 54% of all vehicles sold in 2035 will be EVs. This means Tesla would need to sell a staggering 16 million EVs a year to earn $783 billion in revenue by 2030.
Tesla’s market cap already exceeds the combined market caps of the world’s 10 largest automakers. It also exceeds the total market caps of the top three U.S. automakers, Ford, GM and Toyota. Tesla’s valuation could grow to $650 billion by 2024. That would make Tesla one of only a handful of companies in the world with a market cap over $1 trillion.
Analysts expect 45% annual earnings growth at Tesla over the next five years. That’s a far cry from the 9.5% average growth expected for Apple.
Analyst Adam Jonas estimates that Tesla will sell 8.1 million vehicles by 2030. If the company maintains that rate, its annual revenue could reach $1 trillion by 2030. That’s 650% above the company’s current valuation. That’s twice the size of the company’s sales leaders, Toyota and Volkswagen.
Elon Musk’s Twitter antics cast doubt on his ability to steer the company to greatness
Despite Elon Musk’s reputation as an innovator, his Twitter antics have cast doubt on his ability to steer Tesla to greatness. This may not be a good thing for investors. While the CEO’s Twitter activities may be fun, they can serve as a flytrap for skeptics.
In the past month, shares of Tesla Inc. have fallen more than 20 percent. In March, the stock had the steepest drop in the past two years. The company has been struggling to turn out mass-market Model 3 cars. There are also concerns about employee attrition.
Besides his Twitter antics, Musk is facing scrutiny over his management style. He has been sued for improper workplace practices. And he is embroiled in a dispute over his pay packet. He has also clashed with the government agency investigating a fatal Tesla crash.
Tesla is still struggling to build mass-market vehicles, and parts are not of the highest quality. The company has also had to recall 321,000 vehicles for taillight issues.
While Musk has a number of ventures, he has been focused on SpaceX and Tesla. He has also tried to improve the company’s image. Tesla has implemented a new service standard, which has allowed executives to be easier to reach.
He has also been lauded for his ability to solve engineering problems. And, he has claimed that Tesla could be worth more than Saudi Aramco.
In his blog post, Elon Musk declared that “the most impressive thing about Twitter is that it is open to everyone.” He also tweeted that “if I owned Twitter, I would turn it into a homeless shelter. And then I’d be rich.”
However, Elon Musk’s Twitter antics have cast doubt on his ability as a leader. He has been praised for his ideas, but critics say that he is a little too distracted to do what’s best for the company.
Tesla’s vehicle delivery numbers
Usually, when Tesla (TSLA) reports its quarterly results, the stock gets a lot of attention. But in the last few weeks, the company has been getting slammed on Wall Street by analysts. The company announced lower-than-expected vehicle delivery numbers for the third quarter.
Overall, Tesla produced 365,923 vehicles during the third quarter. That represents a 42% increase over the same period in the previous year. But despite the increase, the company was still unable to meet its delivery target for the year. The company said it is struggling to secure vehicle transportation capacity at reasonable costs.
Tesla has been experiencing supply chain issues, but that is not the only reason the company’s delivery numbers were lower than expected. The company has also been battling factory shutdowns in China.
The company has increased output at two new assembly lines in Texas and Germany. But its Model S and Model X have struggled to ramp up deliveries. The company expects its fourth quarter production to increase dramatically.
In the second quarter of 2017, Tesla produced 254,695 vehicles. The Model S and Model X were a small fraction of the cars produced. However, the Model 3 accounted for a majority of cars produced in the quarter.
The company reported a gross margin of 25.1%. This includes R&D costs but excludes the costs of service center overhead. The company’s gross margin on vehicle sales declined slightly.
In the third quarter of 2017, Tesla produced 343,830 vehicles. The company said it would produce a total of 500,000 vehicles in 2020. That is half of the company’s total production target. The company said its production volume should be up by 50% by 2022. However, it remains 570,000 vehicles short of its annual volume target of 1.5 million vehicles.
