Let’s start the article with the EPS of Tesla. For a while, you may take EPS
synonymous with the profit if EPS gets too technical. The snapshot of the
Bloomberg Terminal does show that the company has made profits in 5 quarters
after it went public in 2010. Out of 40 quarters (10 Years), the company has
made a profit just 5 times (The fifth upward stick is missing from the chart.
It was in 2013). There are multiple companies or organizations that are just bleeding
money for the last many quarters and we wouldn’t be talking specifically about
them but the bottom line remains that Mr. Elon Musk is inching towards to
become the ‘Real Iron Man’ of this era. Hence, it becomes more important to
understand and know more about the revolution that is underway for a decade
now.
(Note: The title of ‘Real Iron Man’ was
first used by Bloomberg on Jun 10, 2014, to refer Mr. Musk)
There are 10 points that summarise Mr. Musk
and the company itself. In the latter points, I have even mentioned Indian
automobile companies justifying the header image with the data file too.
1. The electric-car
maker posted a surprise profit of $342 million in the third quarter of 2019.
Wall Street had expected the company would post a net loss as big as $257
million. Tesla (TSLA) shares soared by up to 20% in after-hours trading. It
marked the first quarter Tesla was profitable since the company posted
back-to-back profits in the second half of 2018. Before that, Tesla had posted
profits only twice since it went public in 2010 — once in 2013 and again in
2016.
2. Tesla delivered a
record 112,000 vehicles globally during the fourth quarter, significantly
topping Wall Street estimates and achieving CEO Elon Musk’s year-end sales
goal.
3. Many analysts does
believe that Tesla is ‘OverValued’. They are quite cautious about the company
as they still haven’t settled for something that could be relied upon for a
steady flow of revenue.
4. The Tesla
Gigafactory in Shanghai opened last year as China's first wholly foreign-owned
auto production plant since the government eased regulations, and the sedans
delivered this week were Tesla's first made-in-China cars to be shipped out to
customers. The Chinese government lifted restrictions on foreign ownership for
auto manufacturers in 2018. Previously, foreign carmakers could only produce
and sell in China through joint ventures with Chinese companies.
5. Influence of
charismatic CEO: In the recent Bloomberg survey (https://www.bloomberg.com/graphics/2019-tesla-model-3-survey/market-evolution.html)
_November_2019, a question was asked to around 5000 Tesla
owners. Question: Did the opinion of Elon Musk influence purchases? 55.4
percent responded affirmative (30.8 percent- strongly agree, 24.6%
agree).
Outcome: Mr. Musk was directed to step down
as chairman. Paid a fine of 40 million. Appointed 2 independent directors; Was
directed to get his tweets reviewed before posting.
Other incidents include him smoking weed on
Joe Rogan Podcast and calling Vernon Unsworth, the diver, in July 2018, a pedo
guy in one of his tweets.
7. China can be the
swing factor for Tesla: The forecasted growth for the EV share for China is
quite high. It is as high as 27 percent. Also, Tesla delivered its first
China-made cars to its customers and it has come when Mr. Musk has been very
popular in missing his deadlines.
Tesla Killers in the Chinese market are
NIO, XPENG, GEELY, BYD
8. The combined
valuation of Tesla has eclipsed the total market cap of Ford and General Motors
combined.
9. The combined
valuation of Tesla has eclipsed the total market cap of Ashok Leyland, Bajaj
Auto, Tata Motors, Maruti Suzuki and Mahindra & Mahindra combined.
{Just for info: In the middle of these, Morgan Stanley Sales
& Trading, US, has picked Maruti Suzuki India as one of the
world’s top 20 stocks. According to a recent report released by Morgan’s
trading arm, India's car market leader is best positioned when demand picks
up.}
10. Tesla has become the 3rd most
valuable company in the world after Toyota ($228Bn) and Volkswagen ($100.8Bn).
Tesla stock has doubled since October 2019.
It may have eclipsed the valuation of major automobile firms but the fact
remains that sale wise, it accounts for just 3 percent of joint vehicle sales
volume (Ford and GM). The execution risk more than ever. And the fact remains
that the company is about to report its 10th annual consecutive net loss (In
the first para we had talked about quarters)
Till then, let’s see how things unfold for Tesla and the legend, Mr. Elon Musk.\
The excel sheets have been attached to this
link for further references: File
The Article may be downloaded as pdf from
the following link
1. https://www.investopedia.com/terms/e/eps.asp
2. Bloomberg Technology – Taylor Riggs
3. https://www.bloomberg.com/graphics/2019-tesla-model-3-survey/market-evolution.html
4. https://www.flaticon.com/free-icon/dollar-symbol_189672#
5. https://www.value.today/world/world-top-500-companies?title=india
6. https://www.business-standard.com/article/companies/maruti-suzuki-overtakes-hindustan-unilever-in-market-cap-race-117121901062_1.html
7. https://in.finance.yahoo.com/quote/TM?p=TM&.tsrc=fin-srch
