For Tesla Motors, innovations are an everyday occurrence.
In Tesla’s 2017 annual report, Musk stated that the company would produce 500,000 vehicles in 2018.
In November 2017, he unveiled the Semi Tesla, a fully electric semitrailer that generated significant interest and orders. And on February 6, 2018, he sent a car into space.
The president and founder of Tesla and SpaceX, Elon Musk completed a triumph by using the February launch of SpaceX’s Falcon Heavy sending a red Tesla Roadster in space. It even had a driver, named “Starman”.
Elon Musk’s vision of Tesla is making people believe that fantasy can become reality. Not only does he make the company’s current and potential customers dream, but he also makes the financial markets dream.
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By taking analysts and investors with him, Musk has been able to propel Tesla’s share price to great heights. Introduced to the stock market in June 2010 at $17, Tesla’s shares reached $352.05 on February 23, 2018, an increase of 1,970%. If you had put £10,000 into Tesla shares in 2010, today you would have over £200,000.
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With a price of around $299 per share at the beginning of April 2017, Tesla Motors’ market capitalisation reached $48.2 billion and was ahead of rival Ford Motor Company on April 3, 2017. In early May 2017, Tesla’s market capitalisation reached $52.6 billion, surpassing General Motors’ by $1 billion.
Since then, the stock price has continued to rise, reaching a market capitalization of $59.4 billion on February 23, 2018, twice as much as Renault-Nissan (25.4 billion) euros, and the world’s largest automaker by sales volume and more than General Motors ($57.4 billion) and Ford Motor Company ($41.7 billion) as of February 23, 2018.
Tesla shares have gained 21% in the past 12 months, compared with an average 14% gain for the S&P 500 index.
However, Tesla has so far sold far fewer cars than Ford, General Motors and Renault-Nissan, and has accumulated losses since its inception. Tesla has also been experiencing trouble manufacturing the Model 3. There is a belief the company is tracking below its 2018 Model S/X guidance of approx. 100k units (an implied 25,000 per quarter).
Production figures have been revised downward and fewer than 25,000 vehicles were produced in the last quarter of 2017. The level of vehicle production has remained virtually stable between the last quarter of 2016 and the last quarter of 2017. Musk announced in early November 2017 a weekly production of 5,000 units of Model 3, this was revised down to 2,500 units per week for the 1st quarter of 2018. And in the last quarter of 2017 only 2,425 units were produced.
In a press release issued on February 7, 2018, Tesla’s management acknowledged production difficulties and delays, especially with the Model 3. However, it indicated that Tesla wants to use state-of-the-art robots to become “the best automaker”.
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Despite fragile fundamentals and cash requirements, the dream of Tesla and its growth prospects continue to attract investors. The effort of the company to develop large-scale projects remains an inspiration. However, it remains to be seen whether the founder’s announcements will continue to persuade those who finance his company which would, of course, affect the price of the company’s share.
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