Thursday, June 12, 2014

Tesla Motors Inc. - Key Drivers And The Model X

Tesla Motors Inc., also referred to as Tesla, is a relatively new company on the stock market. It went public on July 1, 2003 and is operating in the automotive industry. Tesla is responsible not only for the manufacturing, but also for the design and development of electric vehicles, as well as electric vehicle power components. As a company operating its own marketing and retail network, it is engaged in producing commercially one of the most famous electric video, the Tesla Roadster. In addition to such vehicles and their parts, Tesla is also designing lithium-ion batteries, electric motors applicable in multiple industries and gearboxes. This is an important knowledge for TSLA stock investors, since it shows a large degree of diversification in the company’s offerings – something very important for dealing with unsystematic risk. Furthermore, the company also provides services and R&D endeavors in the spheres of electric powertrain devices and sells them to other manufacturers. This not only increases revenues, but also gives the company power on both sides of the supply chain – raw materials & parts and actual production. Among its most famous customers is Daimler AG and its Smart, A-class electric vehicles. In addition to that, it was no more than two years ago when the company started developing a power train system for a Mercedes Benz vehicle.

Tesla has experienced one of the most stable rates of growth over the last year. With a
TSLA stock quote starting at $55, it scored an amazing increase up to $216. This represents a growth of almost 392% for twelve months – a number with little precedents in the industry. On the 7th of May, 2014, Tesla reported earnings after close to be 30% down – a result that is somewhat consistent with the predictions of financial analysts for the quarter. If they are full filed, the company should report revenue of $700 million, which is 24% more than 2013 and an EPS ratio of $0.10 per share. Despite these favorable figures, however, many argue that there is more to the company’s future than the numbers. There is misinformation about the company’s operations in China. However, investors’ expectations are still high because of the announcement for an upcoming Model X, which can make significant changes in the market.

In 2013 Tesla reported $68 million revenues only for the first quarter, and only for the Zero Emission vehicle that is sold to other automotive manufacturers. It was an impressing result, yet recent shifts in the market have caused experts like James Albertine to question whether that number will persist in the following years. Tesla Motors INC didn’t earn anything from ZEV in the last quarter of 2013, which changes the benchmark for comparison entirely. However, with almost no variance in the stock performance over the last year and share value continuously going up, speculations are that Tesla’s stock is still a lucrative investment possibility. It is true that in December, 2013, after the release of the financial statements for last quarters, the stock price went down significantly to $130, it stabilized with the beginning of 2014 and even overreached analysts’ prognosis, hitting the $200 benchmark. The company’s target estimate, along with external projections, sets the one year target price of TSLA stock to be $227.42. However, with such dramatic fluctuations in public opinion, this figure seems to be unrealistic. Such a growth would definitely be healthy for the company, but prognosis are that it will either jump above the targeted benchmark, or will sink significantly with controversial performance over the next quarters. It seems like Model X and the ZEV are what the company’s stock performance is relying on.

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