Feb 14, 2020 Tesla is finally cashing in on its stock price, offering $2B in new stock Read More Time to get money... Tesla's stock has been having a moment — its market cap is now $144B, worth nearly double Ford and GM's combined $83B value. Now, Tesla is cashing in by issuing $2B worth of new stock — 2 weeks after Elon said raising money "doesn't make sense." Tesla stock dipped at first (because new shares dilute the value of existing shares), but quickly bounced back.
Unusual move for a large, public company... but it makes sense. That's because swings in a stock price don't directly affect the company -— A Tesla stock surge doesn't influence its bottom line. Unless the company decides to issue and sell new shares:
IPO: An Initial Public Offering price does matter, because the company is directly selling new shares for the first time to the public (the higher the stock price, the more $$$ the company collects).
Secondary Market: Once those shares are in the hands of regular investors, we are the ones who benefit or lose from the stock price's rise/fall. When you own a stock and sell it high, you get money, not the company.
The Takeaway:Tesla shares are kind of like second-hand Gucci bags... Gucci only makes money off the initial purchase — not when the original buyer sells the special edition purse for a higher price years later. Neither do publicly-traded companies when you sell their shares. But by offering new shares to the public, Tesla can raise cash to fund its projects, like the 4th Gigafactory that's currently finding space in a forest near Berlin.
Feb 5, 2020 Tesla is officially in ludicrous mode — now Earth's 2nd most valuable carmaker Read More Seriously getting out of hand... Tesla. It's now the world's 2nd most valuable carmaker (behind Toyota), despite never having made an annual profit. The stock's almost quadrupled in value since October. It's almost boring to even bring it up anymore... But the rally also has half your coworkers beginning every meeting asking: when will it end?
The Past Week: Tesla stock surged 54% — and it's added $56B to its value (that's almost 4 Lyfts)
The Good: A string of feel-goods fueled some of the rally: rising sales/deliveries, a new factory in China, and its 2nd straight quarter of profitability. Oh, and Tesla's battery partner Panasonic also posted its first quarterly profit for its battery biz.
The Reality: Tesla's value is double that of Ford and GM's combined, yet Ford and GM produced 39X as many cars as Tesla did last year (14M vs 367K). And they were hugely profitable last year, unlike Tesla.
Tesla is like a young avocado tree... Hot, in-demand on plenty of toast, and primed for growth. OG carmakers like GM and Ford are like mature orange trees. OJ used to be on every breakfast table, but now its demand is slowing. And investors care most about future profit/growth potential, and they're not convinced it's there for the Detroit-based orange growers.The Takeaway:The rally could also be an effect of FOMO hype... Investors hopping on the soaring Tesla bandwagon drive the stock higher, rinse, repeat. It could also partly be a "short squeeze." When you invest "long," you hope to buy low and eventually sell higher. "Short" sellers are the opposite — they're betting a stock will go down.
Given all the people Doubting Elon's Vibe, Tesla is aggressively shorted — many investors hope the stock falls. They "borrow" and then sell it, hoping that when it's time to give the stock back to their broker, they can buy it at a lower price and turn a profit.
When TSLA shares rise, that puts pressure on short-sellers to buy shares back sooner (because the more it rises, the more they lose).
Those buy-backs to close out shorts can help drive Tesla's stock higher... which then squeezed even more short-sellers to buy back the stock and cut their losses.
Jan 8, 2020 Tesla just became the most valuable US car company. Ever. Read More As you Musk know... Tesla shares hit full speed lately — they're up 38% in just the last month. Now Tesla's officially become the most valuable American car company in history. Here's how that value got calculated:
"Market Capitalization": A company's stock price multiplied by the total number of shares. It's the total value of a company based on its stock price.
Production just started at Tesla's new Chinese Gigafactory — and China bought nearly 3 times as many electric cars as the US did in 2018.
That's why Tesla's market cap has risen to $85B — beating Ford's $81B record from '99.
Today, GM and Ford's market cap is $87B — combined.
Here's the crazy thing... Tesla's 2019 profits and car deliveries pale in comparison to GM and Ford's:
Cars produced per year: GM and Ford produced a combined 39x as many cars as Tesla did in 2019 (14.3M vs. 367.5K).
Profits over the past year: Tesla's profit was -$827M (negative, AKA a big loss). GM and Ford's combined profit was over $10B (AKA actual money-making).
The Takeaway:Investors care less about today, more about tomorrow... Stocks can rise as shareholders believe a company's profits will grow in the years to come. Tesla's cars scream "future" (electric + cyber), while Ford and GM's preach the past (trucks/SUVs + gas). Investors think 17-year-old Tesla has better profit potential than 112-year-old GM and its even older Ford brother. Jan 1, 2020 Is 2020 the Year of the Electric Car? Tesla, VW, and Ford say yes (Honda disagrees) Read More Turn me on with your electric wheel... Mother Earth isn't a fan of burning gas — So is 2020 the year we switch to something else? The verdict is: a (strong) maybe. Carmakers spent the final week of 2019 humblebragging their future-focused electrification accomplishments.
Ford announced it's sold out of pre-orders for the first electric car it's actually serious about: Mustang Mach-E (this ain't no "compliance car").
Tesla just delivered its first 15 models produced in China, capping an insane under 1 year start-to-finish construction of its car-pumping Shanghai Gigafactory.
VW can't contain its e-citement, so it's accelerated its goal to produce 1M fully electric cars by 2023 instead of 2025.
Honda isn't convinced... The Boston Red Sox to Toyota's Yankees, Honda's experience with electric goes back to '99 (remember that salamander-looking Insight?). So its CEO is qualified to say he's "not sure" the world wants full-electric cars yet. Instead, Honda's focused on improving fuel efficiency with ybrid tech and won't go full electric "anytime soon."The Takeaway:Electric's 2 biggest issues = Price + Battery... If you haven't bought an electric car, it's probably because they're too expensive or you're nervous about running out of juice mid-ride (aka "range anxiety"). Carmakers know that — here are some ways they're trying to fix it:
Price problem: Analysts think e-cars won't be price-competitive until 2024-ish when battery prices fall more. Meantime, Tesla's China plant can produce cheaper, and tariff-free, for Chinese buyers.
Battery problem: Ford's Mach-E boasts a 300-mile option that 80% of pre-orders include. And VW is building a nationwide charging network so you can plug in mid-bathroom pitstop. Dec 23, 2019 Rivian's massive 4th fundraise of 2019 could make electric trucks mainstream (with help from Amazon) Read More “Cute Tesla”... (new bumper sticker for Rivian drivers). The electric pickup truck startup snagged $1.3B in fresh money from T. Rowe Price and existing investors like Ford and Amazon. That cash will facelift an old Mitsubishi plant in Normal, Illinois (great name) to start mass-ish producing e-pickups in 2021. Here's America's State of the Car (and their value by market capitalization):
Detroit's Big 3: GM ($53B), Ford ($37B), Fiat-Chrysler ($29B — FYI, Chrysler merged with Fiat in 2009... and is mega-merging with Peugeot right now).
Electric's Big 2: Tesla ($72B) and Rivian (somewhere between $5B-$7B — it's still private, so we don't know its valuation for sure).
Cars cost more than coders... App-based tech startups raise tens or hundreds of millions of dollars to hire programers and install kombucha taps. But Rivian raises money in the billions to build factories, fill them with high-tech robots, and hire engineers. All those costs are why fundraising for hardware cars is bigger than for software tech.The Takeaway:You want traction? I’ll show you truction... Venture capitalists, Ford, and Amazon had invested a huge $2.2B in Rivian already. To get this extra $1.3B, Rivian probably had to show them some traction — evidence that it's worth investing more into. How about this truction:
Amazon announced an order in September for 100K Rivian electric delivery vans — Bezos needs them to achieve Amazon’s “Climate Pledge.”
Those will be delivered from 2021-2030 — they'll become both steady revenues and rolling billboards for Rivian as Amazon delivers packages nationwide. Nov 22, 2019 Tesla unveils (and starts taking pre-orders for) a rad-looking "Cybertruck" Read More It's a trapezoid... Just days after Ford unveiled its Mustang e-SUV, Tesla hit Detroit below the belt with its first pickup truck. "Cybertruck" was unveiled last night by a proud Elon Musk. Starting at $39,900, it looks like a senior graphic design student's art project.
Blade Runner (2049)... Elon claims Cybertruck's design was inspired by the 1982 Harrison Ford flick that took place in a dust-filled futuristic November 2019. But we're wondering if it'll even see the streets by 2049. Tesla's Model Y crossover still isn't available and there's even more than that in the backlog.
The Tesla Roadster: Unveiled November 2017 with an insane 1.9-second 0-60 mph acceleration — still not available for sale.
The Tesla Semi: The tractor trailer looks Terminator-villain inspired, unveiled November 2017 — still not available for sale.
The Tesla Cybertruck: Unveiled November 2019. Available late 2021 (allegedly). But Elon claims its "exoskeleton" is bulletproof."The Takeaway:Pickup trucks are like diamond rings... the more you spend on them, the more you'll brag about them. Other Teslas look sporty, this looks spooky — and it's aiming for sales from pickup truck buyers who may go function-over-fashion. But if they come around, Elon could mess with Ford, General Motors, and Fiat Chrysler's profit puppies: pickup trucks. Nov 19, 2019 Ford's new Mustang Mach-E electric SUV isn't just a "compliance car" Read More Biggest product unveil since the Model T... Ford needed something big. So it hired a former Michigan Wolverine football player to be CEO. That's when Jim Hackett ordered designers to build an electric SUV inspired by its iconic Mustang sports car. On Sunday, Ford unveiled that Mustang Mach-E. Shares barely budged because electric cars are just a rounding error for Ford, but this signals a new focus on electric.
Don't call it a "compliance car"... Don't. Car companies that didn't completely embrace electric (that's everyone except Tesla and maybe Toyota/Nissan/Honda) still offered electric or hybrid cars — but those were "compliance cars":
You love profiting off SUVs and pickup trucks, which get bad gas mileage.
But the government requires that you hit minimum fuel efficiency standards for your whole vehicle fleet.
So you build compliance cars — electric or hybrid cars with incredible (or infinite) miles per gallon.
Picture this: It's like the table full of Sprite, Dr. Pepper, and fruit punch in the corner at a sophomore party. School rules require just as much alcohol as non-alcoholic.
But the Mustang Mach-E is built to compete, not comply.The Takeaway:Competition in Elon's mirror is closer than it appears... Tesla's first "everyman" electric car kinda has a rival in the low-ish priced Mach-E. Ford's starts at about $44K, which falls to $37K after a federal tax credit — that's about the same price as Tesla's lowest priced Model 3. Plus, the Mach-E is 100% SUV, which Americans always call shotgun on. Oct 24, 2019 Tesla unveils a surprise profit (and a bunch of things are "ahead of schedule") Read More Best-in-class PDF formatting... As frequent readers of Tesla earnings reports, we appreciate the company's new slide layout (the old earnings letters were impossible to read). Tesla shareholders appreciated the actual substance of the 3rd quarter earnings report, boosting the stock a whopping 20% on these key updates:
Model Y is "ahead of schedule": The Goldilocks model is bigger than Model 3, smaller than Model X. Americans love this type of crossover SUV, and production's now expected to start summer 2020.
China is "ahead of schedule": Tesla's building full production capabilities to serve the biggest market (by far) for electric vehicles. The gigafactory in Shanghai materialized in just 10 months, now ready for production.
It's profitable (!): Tesla's yet to have a full year of profitability, and even quarterly ones are collectors items for Tesla stock owners.The Takeaway:Tesla's supposed to be setting records... It's 16-years-old, but company-wise it's still in puberty. Tesla's adding new plants and should be setting sales records each quarter. While the number of cars delivered did hit an all-time high, revenues actually dipped last quarter from $6.8B to $6.3B. Tesla says that's because more customers are leasing — apparently that satisfied investors. Sep 10, 2019 Ford's bonds reach a low blow: Junk status Read More An $11B makeover... Ford wants one. It's all part of the car company's aggressive turnaround plan to become more sexy, electric, and self-driving. So to pay for the new look, Ford issues billions in IOUs (bonds). Before you invest in bonds, a credit ratings agency jumps in:
Ratings agencies evaluate the likelihood a bond-issuer (like Ford) will pay you back.
Based on the company's financial health, the ratings agency sticks a rating on it.
AAA, AA, A, BBB — Anything BB or lower is considered "junk." Ford just got downgraded to that.
Ford was created in 1903... But this situation goes back to 2009. The Big 3 Detroit car companies needed a bailout — except Ford. It even gave its blue oval logo as collateral for a loan to stay bailout-free. Since surviving the car-pocalypse, Ford's bonds have been rated "investment grade." Then it fell behind rival GM's innovation and Ford is now worth less than Tesla. Junk happens.The Takeaway:"Junk" makes almost everything Ford does more expensive... Even though Ford's enjoying huge profits ($22B over the past four years), the credit ratings agencies are worried about where Ford will be 10 years from now. Because of this downgrade, investors will demand a higher interest rate from Ford because its debt is considered riskier. Aug 21, 2019 Tesla solar panels continue big week of news (bad and bad-er) Read More Every youngest sibling knows the feeling... Tesla sells electric cars, batteries, and "finally" (that's how Tesla puts it) solar panels. Elon acquired his cousins' startup SolarCity in 2016, but it's just 7% of Tesla's sales. Now Tesla will offer up SolarCity's rooftop solar panels to rent for only $50/month since sales have fallen for 3-straight years.
Burn me once, shame on me — Burn me 7 times... shame on Tesla. Walmart sued Tesla on Tuesday (not a typo). The megachain installed SolarCity panels to power some stores. The owner's manual didn't say anything about fires that Walmart claims they caused at 7 locations. Apparently Tesla didn't right the wrong, and now its shares are down 2% on the lawsuit.The Takeaway:Solar panels complete Tesla... Tesla's official mission is to accelerate sustainable energy. Electric cars are only truly clean if the electricity they drink comes from clean sources. Powering a Tesla with coal-powered juice is still dirty driving. Elon wants Tesla drivers to charge up with Tesla battery packs, powered by Tesla rooftop solar panels. Jul 25, 2019 Tesla's record sales quarter... turned out to be unprofitable Read More 95K brand new Tesla owners are happy... Shareholders not so much. Tesla stock dropped 13% after Elon announced that all those cars sold in the 2nd quarter cost the company more than they sold for — a loss of $408M last quarter. We're here to explain how a record quarter of sales could be so 😔.
Tesla is eating itself... Cannibalization. It's an aggressive term for when one of your products is so good that it's eating sales of another. For a while, Tesla's only models were the high-end S and X, starting at $72K and $77K. "High-end" translates to "I-don't-care-how-much-it-costs" customers, which translates to profits. Now Tesla's pushing its cheaper Model 3 (starting at $39K) to become the 1st mass-production electric car company — and the 3 is eating S sales.
Exhibit A: In California, where parents dream of their kids' first self-driving ride, the number of Model S registrations at the DMV fell 54% last quarter — and the number of cheaper Model 3 registrations doubled.The Takeaway:The Model 3 is too good... That's the problem. Styles, looks, performance — Squint your eyes and the Model 3 looks like a Model S. But it's way cheaper. Companies can avoid cannibalization by clearly differentiating products to make the more expensive one objectively better. Now Tesla needs to learn how to not just sell a ton of cars, but do it profitably. Jul 3, 2019 Tesla's 2nd quarter record deliveries quiet the skeptics Read More 95,200... That's the number of Tesla cars that were delivered to affluent, environmentally-conscious, and/or tech-obsessed new owners from April-June. That's more than double the number of deliveries in 2018's 2nd quarter, and the positive result popped shares up 7% Tuesday.
This isn't some earnings report... It's the "Vehicle Production & Deliveries" report — car companies preview their financial results with this crude, raw, meaty, production count. But Tesla's had worries about "weak demand" from the beginning of the year. That's when deliveries fell 31% from the quarter before, and flocks of Tesla doubters started chirping that customers just weren't that into Elon's cars.The Takeaway:If Tesla's not setting records, then something's wrong... Tesla produces a tiny fraction of the number of cars General Motors makes, but its stock by market value is about 80% of GM. It's like a kid measuring her height with a marker against the wall — Tesla better be setting records each quarter. This report signal's Tesla's master plan is more on track. Apr 5, 2019 Tesla sold way fewer cars last quarter (and Elon hit court) Read More Just one of those days... Shares of the electric car pioneer Tesla sank 8% Thursday on 1 business headline and 1 legal one:
Both its car production and deliveries were down across every Tesla model in the last quarter of 2018.
Elon Musk visited court after ignoring an SEC order for Tesla lawyers to screen his tweets pre-tweet (the judge gave him 2 weeks to agree to a settlement with the SEC).
63K eCars delivered — But that's down 31%... And Tesla got right down to the excuses for coming up short:
Ships take time: Tesla began exporting its lower-priced Model 3 to China and Europe. It takes a while for them to get there.
$$$: That US government subsidy to encourage electric car purchases? Just got cut in half, making Teslas more expensive for customers.The Takeaway:Tesla shares have no chill... The polarizing CEO attracts lovers and haters (think pineapple on pizza). Thursday's report makes Tesla's goal for 360K-400K car deliveries this year look unreachable, so investors piled on the hate and sold shares. They think it'll run out of money. Others still think it's the car company of the future.