There are few words which can better describe Tesla Inc (NASDAQ:TSLA) other than exceptional.
The company which has been at the forefront of creativity has brought to the world innovation beyond our wildest imagination. From trips to outer space using reusable spaceships to underground travel loops to energy-saving, self-driving cars, Tesla is automation’s global giant with an equally sized giant-like vision, a vision pioneered and driven by their Chief Executive Officer, Elon Musk.
Elon Musk: The Man, The Legend
The man that is Elon Musk needs little introduction. His work speaks for itself.
He has been the talk of many news articles, tech magazines and scholarly researches with some analysts alongside players within the technology space proclaiming him to be the meticulous genius of the 21st century. He carries with him the Tesla brand and does this with zeal, choosing to ensure the world knows that he will deliver on every promise which his brand promises. As a result, he has been seen to work crazy ours – 23 hours on some days – and even joining workers at the production line just to ensure that the output gets to the levels of perfection he deems fit; and with good reason.
Given the nature of work which Tesla is involved in, any mistake means a catastrophe for the company. The resolution which they have brought to the world comes at a steep cost: individual lives. As such, the careful crafting and rigorous critiquing of ideas, their meticulous execution and eventual implementation is a process which needs a curious mind to see them, a believer to know they can exist, an iron hand to govern their implementation and a people’s person to bring them to market; a role which founders such as Steve Jobs and few others have played over the years.
It seems Elon Musk has joined this list and mastered the great prowess needed to drive change.
The Price Action
With such an impeccable record, it comes as no surprise that Tesla’s share price has scaled the full heights of share price excellence.
Over the past five years, the company has achieved a share price jump from a price of $90 back in 2014 to a high of $390 back in 2018. Currently, the firm trades at $363 – representing a 300% rise over this period and a compounded annual growth rate of 32% to investors.
Readers can view the above price action in the chart below:
With a price as above coupled with such margins, investors have become more and more interested in the shares of Tesla. As such, we have been looking at the company – looking at their past, present and future – and this report represents our findings.
The Energy-Saving, Self-Driving and Space-Seeking Company
As previously stated, Tesla was a pioneer in the energy-saving and self-driving space.
First, it is important for us to point out that Tesla is primarily an automaker, playing in the leagues of major global automakers. However, their niche was carved from the fact that current automakers rely on oil products to power their vehicles, all whose emissions have a negative impact on the environment. Tesla came into the market as the producer of electric cars – zero-emission vehicles – primarily to provide a means to conserve the environment. Since then, the Morphosis has been realized slowly with the company harnessing their prowess in technology to bring the concept of driverless cars to the globe.
The company brought together some of the smartest minds and created a system which would map out the road network in the US and codify it using machine learning to create a vehicle which would self-drive.
During this process, the company has emerged as one of the largest lithium consumers in the world as a result of the development of rechargeable lithium batteries used to power the self-driving Tesla cars.
Powering this movement is their current mega development, Tesla’s Gigafactory which is currently under construction in Sparks, Nevada, USA. The factory which broke ground in 2014 is poised to expedite the transition to energy saving driverless cars in the next generation by ensuring the production of at least 500,000 cars per annum.
According to Elon Musk, their operational wing has a ready ‘achieved production capacity of 3,000 batteries per week and reduced the production time by over 85% – from 7 hours to 70 minutes’ while working tirelessly to achieve their target of 5,000 batteries per week.
To top it all up, their space mission – SpaceX – which Elon is using to head to Mars.
SpaceX has been working to establish methods of reusing spaceships and trot outer space, missions which have so far been a pleasant success as ships have landed right back as were expected. Their current 93% success rate is rather impressive for a venture which, a few years back, would have been considered impossible by many.
Such a synopsis speaks to the prowess of the firm, therefore, the success of Elon Musk. There is much that can be said about the company, however, one thing stands out: they are winning.
A Few Downsides: Growing Fears
With such a large tech-oriented company comes the downsides of technology: the threat of a hack.
More recently, Tesla has sued a former employee who hacked into their system and leaked privileged information on their operating system among other files. This presented a problem to the Tesla team as well as to the public, raising the fear which once existed: what would happen if driverless cars were hacked into?
The fear that an individual can have control over the life of an individual, even for a moment, brings with it the impact technology will have on the lives of many across the globe: the fact that one can lose their life at any moment. The risk associated with a hack present catastrophe to people. This was best expressed by Wisconsin Senator, Sean Duffy who stated:
“There are a number of people out there that are somewhat resistant to entrusting their lives with autonomous vehicles,”
Tesla has come out to defend their position strongly by suing the individual for $1 million as well as a statement from Elon Musk via a tweet stating:
“There is more, but the actions of a few bad apples will not stop Tesla from reaching its goals,” he tweeted. “With 40,000 people, the worst 1 in 1000 will have issues. That’s still ~ 40 people.”
In this case, ‘there is more’ referred to the sabotage which Tesla experienced courtesy of the hack from their former employee. The security of the system has been heightened at the company so as to ensure that they do not experience such a hack in future and are able to meet their goal of clean-energy and driverless cars in the future.
The Future of Tesla
Tesla is currently embarking on expansion into other spaces: Europe and Asia.
Currently, Elon spoke to the fact that Germany is poised to be the next location for their Gigafactory in their bid to drive the driverless economy to the world.
“Germany is a leading choice for Europe. Perhaps on the German-French border makes sense, near the Benelux countries,”
Despite the project still being in the conceptualization stage, the future for Tesla’s Gigafactory seems quite lucid and the idea of expansion to other sections of the globe seems almost fully crystallized.
As a result of the digital disruption, it is now a common phenomenon for companies to be valued based on their growth potential rather than their profitability.
Tesla is riding on this fact. Despite their financial performance not portraying the $61.5 billion valuation they currently have; their growth potential is nothing but solid.
Currently, their net loss position stands at $709.5 million, up from $675.3 million over 1Q2018 and 4Q2017 respectively. However, their operating cash position had turned positive over 4Q2017 to $509.8 million, only to turn negative again to $398.3 million over 1Q2018 as a result of a stock up in inventory.
All in all, however, the company remained true to their commitment to dominating the clean energy driverless car space. Their goal is lucid and their financials are only a step from sharing the positive image their goal portrays.
TSLA has beat all the records set by other companies in this transformation age. They have not only innovated but also ensured that the innovation comes to life right in front of the consumer. Their goal – championing a clean environment with AI at the forefront – has gotten them rising to the top. A further rise for them isn’t far from being achieved and during this period, investors will be glad to have put their money in Tesla as they watch the stock drive itself to profit.
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Disclosure: We have no position in TSLA and have not been compensated for this article.