Tesla Stock Analysis

Tesla stock analysis

Are you on the Tesla bandwagon? Sure, their cars are cool, but how do they actually make money and why has Tesla stock gone nuts over the past couple years?

Full disclosure, we bought a Tesla Model Y this year. 

There are many things that set Tesla apart as a company. Let’s dive into their business model and finances…

When was Tesla stock listed on an exchange?

Tesla Inc. is an automotive electric vehicle manufacturer as well as a clean energy company based in the United States.

They listed on the NASDAQ 13 years ago in June of 2010 at an initial public offering price of $17 per share. Tesla stock grew slow and steady for nearly 10 years.

On the first trading day of 2020, January 2nd, Tesla stock opened at $84.90. In the year following, however, the stock price went parabolic. On the first trading day of 2021 Tesla opened at a price of $719.46 (despite a 5/1 stock split in August of 2020 !!).

During this astronomical growth in the last two years, Tesla has seen an all-time high share price of $1,243.49. 

Chart of TSLA since its listing in 2010 to date 

How Tesla makes money

Currently, Tesla eliminates middlemen and sells their cars directly to their consumers.

This is called a D2C business model (Direct-to-Consumer). Tesla has direct contact and support to its consumer. It does not have their car sold by dealerships, as with almost all other car manufacturers. They also have service centers in every location a Tesla is sold.

Tesla also has a network of supercharging stations where their cars can be charged for free in a very short period.

This combination of direct service from the manufacturer and convenience for customers has built up an incredible amount of brand loyalty from Tesla customers. 

Another key component of Tesla’s business model is selling vehicles that are available in every price range. 

They offer 3 price vehicles in three price ranges right now: the Model 3 (affordable at under $40,000), Model X (high-end at over $110,000), and Model Y which is a good middle ground (around $65,000). 

It was only in 2021 that Tesla finally made full profit off the sale of vehicles. Up to that point, the majority of Tesla’s profit came from the sale of regulatory credits.

Many state governments mandate car makers to produce a set number of zero emission vehicles each year. If they don’t, they have to buy these zero emission regulatory credits from car companies who produce enough zero emissions vehicles.

All of Tesla’s vehicles are zero emissions. So they get a lot of credits from state governments. These credits are sold to other car makers for 100% profit. This is how Tesla sustained its business for a long time.

But as of 2021, they’re most profitable business venture is selling vehicles.

Tesla Stock fundamentals

Total Revenue (2021)Net Income (2021)Price to Earnings (Current)
$ 53.82B$5.52B199.46
Price to Sales (Current)Price to Book Ratio (Current)Market capitalization
Equity (2021)Debt (2021)Cash in the Bank (2021)

What’s Tesla going to do next?

Tesla fans are waiting for the next two vehicles to launch: the Tesla Roadster and the Tesla Cybertruck. Tesla is taking pre-orders for both vehicles.

The roadster will be valued at over $200,000 and will be the fastest and sportiest of all Tesla models to date. The car has been said to go 0-100 MPH in under 4 seconds.

The production of Tesla’s Cybertruck has been delayed from 2022 to 2023 (the same year as the roadster) and offers a strong “army-looking” electric vehicle that would be the first of its kind in the market.

The Cybertruck reportedly received nearly 150,000 pre-orders less than two days after its unveiling

What do I do with this information?

Use this as a starting point. Dive further into Tesla and their competitors. Based on your own research, make your own decision about Tesla stock as an investment.

If you like stock analysis like this, check out these other stocks we’ve dug into lately.

That’s all for now.

Happy trading,

Your fellow Stock Hackers,

🍒Cherry & Erwin

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