As soon as it comes to the phenomenon of growth in the value of Tesla’s stock price, all fundamental criteria fade into the background – investors are inspired by the energy of the company’s founder, who is literally moving mountains. The current quarterly report only added optimism to analysts, and immediately after its publication, Tesla shares rose in price by another 5%.
Since the beginning of this year alone, Tesla shares have risen in price fivefold, they were constantly fueled by some expectations: either with the possibility of inclusion in the S&P 500 index, or with the splitting of shares to increase their availability. In the second quarter, Tesla’s main assembly line in California was idle for several weeks due to the pandemic, but the company still hopes to deliver 500,000 electric vehicles by the end of the year.
At a quarterly event, analysts tried to calculate how many cars Tesla could release next year, the resulting range from 850 thousand to 1 million copies, the company’s representatives did not dispute, but explained that they would give a forecast for 2021 in three months, when they summarize the results current year.
Industry analysts interviewed by Barron’s and Seeking Alpha’s resources have mostly raised their outlook for Tesla shares, either recommending them for purchase or offering to keep them in the investment portfolio. The ambitious goals set by Tesla’s management are not the main factors that contributed to the rise in the stock price after the opening of today’s trading session. More importantly, investors were encouraged by the company’s financial results.
First, it has been operating without losses for the fifth quarter in a row. Secondly, the profit margin in Tesla’s automotive business increased from 16% to 22% over the quarter, which encouraged analysts amid repeated price reductions for the brand’s products that took place in the reporting period. Third, the company was able to generate free cash flow of $ 1.4 billion, which is quite good in light of the planned capital expenditures for next year. Tesla representatives at the reporting event said that in the next two years they will spend $ 2-2.5 billion annually to expand the production of electric vehicles and traction batteries. Tesla has attracted billions of dollars in investments throughout its history, while remaining unprofitable, so the company’s ability to generate positive cash flow is welcomed by investors in light of the still Napoleonic plans to expand production.
Some experts were impressed by Tesla’s ability to optimize production, both in terms of cost management and space efficiency. Deprived of the stereotypes of large automakers, Tesla is capable of making bold experiments in many areas, which often lead to lower operating costs. Some analysts see the prospect in the growth of Tesla’s profits due to related types of business: the operation of robotic taxis, insurance and the sale of software options in the form of autopilot systems.
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