Share price of Tesla Inc. (NASDAQ:TSLA) stood at $1,592.33, which is pretty remarkable. In the last 6 months, in which the corona pandemic was at its peak, Tesla stocks mostly and only gained. Starting at $572.20 in January, 2020, to $1,592.33 on July 22nd, 2020, Tesla has surprised share owners, investors, analysts and analyst expectations as well.
While Tesla Inc. stock has been in green in the last 6 months, the company’s stock soared more than 5%, with a reported second quarter GAAP and adjusted profit, allowing it to set on a well seated course to join the S&P 500 index. Tesla Inc. has stunned investors as most other stocks were affected by the corona upset. It was reported that Tesla quarterly sales were above Wall Street expectations, which gave its stocks a boost. Furthermore, Tesla has also announced a new factory location for itself, which is Texas, which shows that Tesla has plans to expand. You can only expand when you have running profits so Tesla is a company to watch.
Tesla (TSLA) reported that it earned $104 million in the quarter, compared to a loss of $408 million a year ago, in the same quarter. Tesla also beat analyst expectations as FactSet predicted a loss of 2 cents per share on sales of $5.15 billion for Tesla. While speaking about his company, Tesla Inc. (NASDAQ:TSLA) Chief Executive Elon Musk, told an analyst conference that ‘demand is not their problem’. Most of the challenges he said, arise, because there are some parts shortages which relate to production and supply chain. He said that the challenges were taken care off but didn’t mention the impact of corona pandemic. There were challenges, and many, but ‘they got done’, he said.
Tesla Inc. second quarter numbers were very strong, setting Tesla for the S&P 500 inclusion (SPX +0.57%),which is a very big deal.
While Tesla has a decent share price, Musk said that the company’s focus is on maximizing growth and making electric cars that are affordable. What is concerning investors about Tesla is that they are making quick decisions. Tesla’s decision to cut costs while still launching new models with all such challenges that go in a new model launch is worthy of consideration. Tesla is still seeing success and confidence from the market, which is adding to its numbers. On the other hand, some are saying that Tesla hit free cash flows with sustainable measures. They haven’t just gone one direction to get profitability. Rather, they have ensured a sustainable route which is ‘by reducing costs’. However, according to Bank of America Securities, they are keeping their caution on Tesla because their stock was ‘overheated’ and thus, urging investors to remain cautious despite momentum and hype.
Few important factors that sent Tesla Inc. (NASDAQ:TSLA) was an increase in sales. While Elon Musk has been ‘casual’ about Tesla’s performance, he also highlighted Twitter and legal spats and his factory closure as another hindrance in Tesla’s overall performance. Essentially and to conclude, Tesla Inc. managed to stay profitable despite the global corona pandemic. However, what is a major concern for Musk is the price of his vehicles. While this is hindering overall growth in Tesla’s growth, the fact that Tesla cut its costs helped it gain momentum. Consensus regarding Tesla still remains fixed though. Tesla beat analyst consensus estimate for a loss of $1.06 a share to 50 cents a share on GAAP basis.
In the coming months, Tesla Inc. could benefit from a demand in oil prices, which will lead for a rise in demand for automobiles, a rise in demand for luxury products, and growth in high rise stocks. However, it should be cautious about its prices, for people would want to go for affordability than superiority and relaxation than difficulty in the months to come.
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