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Tesla (NASDAQ:TSLA) Redefines Everything. That headline could be over 100 years old and it could refer to Nikola Tesla himself. Tesla, the unsung pioneer of the development of electricity probably never imagined that “Tesla” would be the nameplate of a car and a manufacturer that are bringing the most radical change to the automotive industry since Mr. Benz named his first car after his daughter.
Headlines around the world this morning are describing the results of early trading and its impact on the Tesla share price. Words like zooms, soars, electrifies, and surprise are being used prolifically the morning following the release of the company’s second quarter earnings. All of us who write headlines are pressed daily to find the right and clever adjectives that catch readers’ attention. I’m not sure, however that there is an adjective adequate to describe a company’s share price that has followed a 300% increase year-to-date with a 15% increase in early morning trading. How about unbelievablesuperspectacularendous? I’m not even sure that that comes close.
Aside from the fact that the automaker is producing what millions of skeptics said could not be done, it is producing financial results of the same kind. The company seems to carry the same burden as the old scientist did, but the company is doing what Nikola could not. The company is becoming more and more successful, broadening its offerings and its footprint whilst continually beating market expectations.
Tesla brought home “improved gross margins, increased production and beat most Wall Street analysts’ expectations.” The company beat expectations of a 17 cent per share loss on total revenues of $385 million, by returning earnings of five cents per share on revenues of $405 million. Production has increased by 25% during the quarter, with 500 Tesla vehicles now being manufactured per week. Kelly Blue Book analyst, Karl Brauer, said that, “The automaker’s long-term goal of producing a high-volume, low-cost electric car is the next big hurdle, but for now they seem to be firing on all non-existent cylinders.”
The $26.3 million of reported net income was a 70% increase over the first quarter. The company delivered a record 5,150 vehicles during the second quarter bring the grand total of Tesla electric vehicles on the road to 13,000. Moving toward its goal of ramping up to a cruising production rate of 500,000 cars per year, CEO Elon Musk noted that, “We are production constrained, not demand constrained.” The last time I checked the law of supply and demand, that was considered to be a very good thing. Musk expects to produce a total of 21,000 vehicles this fiscal year. Demand for the long-range, eye-appealing, electric car will continue to increase as it becomes available in Europe in the coming months.
There are some things that go largely unnoticed to investors. One of them is that on 22 May 2013, Tesla repaid a $465 million loan from the U.S. Department of Energy nine years early with a payment of $451.8 million.
Keep in mind that Tesla is not only manufacturing electric cars, but it has developed several different ingenious charging methods and is installing “supercharging stations” along major U.S. interstate highways.
Tesla, which was founded in 2003, was expected, as I mentioned earlier, to fail. Ex-presidential candidate, Mitt Romney, referred to Tesla as a “loser.” Turns our Romney was wrong, because, as the company keeps gaining momentum Tesla is redefining everything.
