Tesla Motors, Inc. Financial Analysis Essay Example for Free

Tesla Motors, Inc. Financial Analysis Essay Tesla Motors, Inc. was founded in early 2003 by a group of Silicon Valley engineers, incorporated in Delaware on July 1 of the same year, and is now headquartered in Palo Alto, California (â€Å"Tesla- Investor†). The company designs, develops and manufactures electric vehicles and electric vehicle powertrain components. Tesla also provides the same services and powertrain components to other manufacturers of electric vehicles (Analysts Corner 2). Tesla Motors is best known for producing the Tesla Roadster, an all electric sports car released in 2008, with outstanding performance results (â€Å"About Tesla†). Tesla has developed a unique marketing plan that differs from the traditional automotive industry by marketing and selling its products over the internet and through a global network of 32 stores that are owned and operated by Tesla. The company has 2,964 employees and has electric vehicles on the road in 37 countries around the globe (â€Å"About Tesla†; Analysts Corner 2). On June 29, 2010 Tesla Motors Inc. became the first American car company to go public since the Ford Motor Company in 1956. The company offered 11.8 million shares priced at $1 above the initial offering at $17. The IPO was so successful that Tesla offered an additional 20% equity in the company by increasing the offering to $13.3 million shares to meet demand. The company raised a total of $226 million, the stock price soaring up 41% to $25 a share on opening day (Andrejczak). Today, Tesla Motors Inc. (TSLA) is traded on the NASDAQ stock exchange at a price of more than $180 a share. The stock has grown over 800% since its IPO and now Tesla has a market capitalization of over $22 billion. This impressive increase in stock price may come as a surprise to many investors due to the company’s earnings, or lack thereof. Given the current economic conditions, the relatively new market and existing competition; the Tesla stock price is grossly overvalued. Tesla produces an outstanding product with an outstanding price tag. The new Tesla S was designed to compete in the luxury sports car arena along with BMW, Mercedes and Audi. Tesla has estimated that 21,000 Model S will roll out of its production facility in 2013 at a sticker price between $70,000 and $100,000 (Seetharaman; Finger). This year, Mercedes will sell 25,000 luxury sedans in that price range to U.S. consumers and BMW just slightly less than Mercedes (Finger). Tesla has estimated it will produce 40,000 Model S next year, almost twice the number of BMW’s sold in that price range. In the post recessionary economic climate of 2013, there is not a strong demand for vehicles in this price range, even with the $7500 tax credit offered to consumers. The Tesla Model S is still out of reach for most Americans. There are more reasonably priced alternatives in the EV market such as the Nissan Leaf and the Chevy Volt, but sales have been sluggish (Stammers; Alpert). General Motors recently â€Å"announced a $5,000 formal price cut for the Chevrolet Volt plug-in hybrid† and Chrysler has opted to stay out of the EV market until â€Å"dragged there by consumers† (Buss). Since the key to the future profitability of Tesla Motors is in the mass production of an affordable EV, demand for the product becomes paramount. As Dale Buss, an automotive industry journalist explains; It’s one thing for Tesla to sell nearly 1,500 Model S a month at about $70,000 apiece in the U.S. market these days; when Elon Musk’s startup attempts to penetrate the lower part of the EV market with its own model, success will be a lot harder to come by. (Buss) Tesla intends to meet that challenge with the 2016 release of the Gen. III., a Tesla EV with the range of a Model S, but half the price. The 200 mile range of a Tesla EV is what gives it a competitive advantage over other more affordable EVs, but at the cost of additional batteries (Alpert). The added cost of the batteries makes the target price next to impossible to reach, but necessary in order to avoid the fate of other affordable EVs, such as the Volt. So, rather than realize their goal †to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars†(â€Å"Tesla Improves†), Tesla Motors is â€Å"helping create a highly bifurcated segment where only expensive EVs can achieve a feasible volume† while pushing affordable EVs and its own profitable future further out of reach (Buss). Tesla Motors CEO, Elon Musk, maintains that there is still adequate demand for the Model S and that the company has received 10,000 orders in North America alone. The truth of the matter is that the true demand for EVs remains to be seen. In May of 2013, Tesla shocked analysts when it â€Å"stopped disclosing its end-of-quarter order backlog which might have shed light on the issue after previously trumpeting a 15,000-unit reservation list† (Alpert). Many of Tesla’s orders were cancelled due to the company’s price increases on options for the Model S, which added an average 8%-9% to the overall price and stirred up numerous customer complaints on the Tesla website blog (Finger; Blanco). Many consumers are interested in reducing CO2 and reducing our dependence on fossil fuels, but simply cannot afford the more expensive alternatives. In an attempt to make Tesla vehicles more affordable and increase sales; Tesla Motors has partnered with U.S. Bank and Wells Fargo Bank to provide financing to qualified Model S customers that includes longer terms, lower payments and the Tesla resale guarantee. â€Å"Buying a Model S through the Tesla financing offering now comes with a guarantee that the resale value will be higher than that of BMW, Audi, Mercedes, Lexus or Jaguar† (â€Å"Tesla Improves†). The guarantee is personally backed by the CEO of Tesla Motors â€Å"to give owners complete peace of mind about the long term value of the product† (â€Å"Tesla Improves†). Elon Musk, Tesla’s chief executive described the financing program during an interview; If our car was chiefly available for purchase and not by financing, I think thats maybe accessible to roughly 1 million US households. A financed product with the right financing-fully optimized financing, I think its probably accessible to the top 10 million households. (Seetharaman) Musk went on to report that since the finance program was implemented, the company has experienced â€Å"a meaningful increase in demand† that he estimates to be about 30,000 cars a year in North America (Seetharaman). There is little doubt that the Tesla financing program has boosted sales. â€Å"In the second quarter 30 percent of sales fell into this category† (Finger). Amazingly, against generally accepted accounting principles (GAAP), Tesla records the entire amount of the payment it receives from the bank as  revenue. The bank pays the full amount of the car price to Tesla, but after the 3 year lease agreement ends, Tesla pays the outstanding balance of around $46,000 when it takes the car back as part of the buy-back guarantee. According to GAAP, the $46,000 would be a debt until the bank has been paid. This method of recording debt as revenue makes Tesla look more appealing on the books. Meanwhile, Tesla builds up an expensive and costly inventory of used Model S sedans as it works hard to convince consumers that the model S should be replaced, which effectively lowers the value of their own used inventory. The buy back guarantee has the potential to become a serious liability for the new car company. In an effort to promote the use of cleaner technology and improve the air quality in the state of California, law makers there have implemented a program whereby automobile producers can earn credits for every zero-emission-vehicle (ZEV) and partial-zero-emission-vehicle (PZEV) brought to or sold in the state. Manufacturers can only sell a certain amount of vehicles that don’t fall into this category. The manufacturers then have the option to purchase more credits from other companies in order to continue selling vehicles in California. Tesla earns credit every time the company sells a Model S and these credits are sold to competitors. It has been estimated that for every Model S sold, Tesla receives between $25,000 to $35,000 worth of these credits and could contribute about $188 million in revenue for 2013 (Isidore). This year Tesla Motors Inc. reported its first profit in the first quarter and â€Å"better than projected earnings† for the second quarter (Isidore). A closer look at the source of that revenue reveals that it did not come from sales of vehicles, but actually from the selling of zero-emissions-credits. Tesla sold a total of $68 million worth of the credits, 12% of its total revenue in the first quarter (O’Brien). Despite the source of the income, Tesla Motors stock price rose 17% when the quarterly report was released (Seetharaman). Another contributing factor to the run-away stock price is that historically Tesla stock has been a favorite amongst investors for shorting. One analyst at Barron’s reported that as much as 45% of Tesla outstanding shares were shorted until the first quarter earnings were released (O’Brien). When the  stock began its climb, the short sellers were forced to buy back at higher prices than they had hoped to, which effectively drove the market price higher. Investors also responded favorably to the news that the Model S won The Car and Driver Magazine’s Car of the Year for 2013 and again when the Model S earned the highest score ever given to an automobile by Consumer’s Reports (O’Brien, Finger). The forward price earnings ratio for Tesla Motors is in the neighborhood of 170. A high price-earnings ratio suggests that investors are expecting future growth and earnings. An exceptionally high P/E is indicative of a speculative bubble and overvaluation. Market Capitalization for Tesla Motors Inc. has doubled within the last couple months and is now over $22 billion. The value of an enterprise for profit is dependent on what it can produce or profit from moving forward into the future, and in doing so increase the wealth of the ownership. Tesla Motors will produce roughly 20,000 cars this year and plans on doubling that output for 2014. That makes every car Tesla produced this year worth $1.1 million of stock. Compare that number to â€Å"luxury automaker BMW that has a market cap of$52.79 billion on global sales of 1.85 million cars or $28.53 thousand per car. Mercedes Benz produces cars at $43.4 thousand per car using the same calculation (Finger). Tesla will have to produce hundreds of thousands of vehicles to support a stock price even half of what it is currently. With the limited amount of demand at the current price, the stock can soar as high as the market will allow it, but the price will have no foundation and will eventually crumble down. The over-valuation leaves Tesla poised for a buyout or takeover by a larger manufacturer. Tesla Motors is obviously good at what it does. The technology developed by the company is being used by other more established automobile makers, such as Toyota and Daimler. The problem with specialization is that it leaves a company, especially a large one, vulnerable to changes in technology, market shifts and consumer sentiments. Tesla has all of its eggs in one basket. A significant shift in the market, a radical change in technology or even consumers warming to the hybrid concept before taking to the electric one; would be the end for the new car company. It seems that Tesla has nothing to fall back on, no contingency or alternate plan. Although Tesla has taken the electric vehicle to new heights, the technology is not break-through and the concept is not mind blowing. The whole package is a winning combination, in a small segment of the market. The company may be headquartered in California and founded by geeks, but it is still an automobile producer. The automotive industry is dominated by an oligopoly of corporations that historically have been successful at weeding out smaller companies just like Tesla Motors. The competition is fierce and the pockets are deep, economies of scale are a reality in automobile manufacturing. The patents and proprietary technology that Tesla holds right now will be meaningless in a matter of a few years, or several months. If the demand for electric cars increases significantly, Tesla will be forced to compete. Without the differentiation that Tesla has now, the company doesn’t have much of a chance. Tesla has a challenging future; in order to survive it must lower its costs and crank up production. The niche market of wealthy movie stars that want to be seen in a Tesla Roadsters isn’t going to get them there. The high price people are willing to pay for their stock isn’t going to either. Tesla Motors Inc. produces amazing all electric vehicles that are sporty, luxurious, and state of the art. The company’s CEO and spokesperson, Elon Musk is an innovative billionaire, who is enthusiastic, confident, and as cool as the Tesla Roadster. The company has turned the automotive industry upside-down and investors want a piece of it. The stock price is just waiting for another promising news story or SEC filing to soar even higher.†Tesla is, according to all the critics, an incredible car, but it is a company held together with financial bubblegum† (Finger). The only question is when will the bubble burst? Works Cited About Tesla Motors. Teslamotors.com, 2013. Web. 23 Sep 2013. . Alpert, Bill. Recharge Now!. Online.barrons.com, 2013. Web. 24 Sep 2013.

The Reasons For American Economic Prosperity In The 1920s :: essays research papers

Why was there economic prosperity in American in the 1920’s? I know that America on it’s surface was prosperous during the 1920’s. I know this because of the physical signs, and the evidence I have found supporting this concept. Some of the physical signs of the then prosperity are evident today, like the skyscrapers and Empire State building. There were the inventions of manufactured fabrics and materials such as Bakelite, artificial silk and Cellophane. Airlines carried almost half a million passengers a year, which compared to Europe at the same time, was a massive number of people. In this essay I will analyse all the reasons behind the economic prosperity in 1920. World War 1 assisted America’s latter prosperity. Throughout the war American industry benefited, because countries that couldn’t buy goods from Europe, did so from America. And along with this Europe bought products from America, products that they weren’t producing while they were fighting. Furthermore, during the First World War, American banks lent money to their European Allies. In the 1920’s, this was being paid back with interest. The war had also led to advances in technology, such as mechanism and manufactured materials. Production of Iron Ore, coal, petrol and wheat and exportation of chemicals, wheat, iron and steal all had increased considerably by the end of the war. By the end of the war, America had decided to isolate itself from the problems of Europe, and set itself about making the most profit in business. This isolationism built up the confidence of the American people. An increase in personal wealth, demand and output production all helped America’s prosperity. Banks were eager to lend money to businesses and individual’s. With this easy money, and the introduction of hire-purchase schemes, the demand for products increased. Consumer spending was incredibly high, which is reflected in the statistic that in 1920 there were 312 department stores, and by 1929 there were 1395. There was a consumer boom. Business profits rose by 80% during this period, which in turn raised share dividends by 65%. Also some women had continued working as they had done through the war. Both of these elements contributed to giving people again, more money to spend. However, the availability of money was not the only reason for increased consumer spending. New inventions such as vacuum cleaners, refrigerators and washing machines became available, and advertising over the popular radio encouraged consumers to spend more on everyday products.

Louise Essay

The story is entitled by a woman’s name, therefore it gives a foreshadowing that the story will be about a woman or a girl named Louise. The first sentence begins with the personal pronoun I, which means that the story is written in the first person. Thus, taking into consideration that the author is a man, even before the reading, it is possible to suppose that the story will be about a woman who has left a great impression about herself. Usually it is a good impression even if it is about a one-way love. That’s why from the very beginning the story has surprised me much, because it begins with the sentences: â€Å"I could never understand why Louise bothered with me. She disliked me and I knew that behind my back she seldom lost the opportunity of saying a disagreeable thing about me.† Such statement (she disliked me) is a challenge for a curious reader and makes him read up to the end and find the reasons. Having read the story â€Å"Louise† I can say that the main theme of it is the relationships between people. The problem which the author raises is that some people can play on their neighbours’ feelings very easily. They use any possibility to do it. In case of the main character, Louise, it is her mystic heart disease. She could convince everybody, including herself, in its existence and there have not been any attempts to argue, before the narrator has done it. He tells the story in an ironic way, but at first it is a hidden irony. He does not comment on the events, he just presents them. For example, while Louise’s first husband Tom Maitland wants the narrator to believe in her bad condition and for that oxymoron â€Å"she’s dreadfully delicate† and metaphor â€Å"her life hangs on a thread† are used, the narrator brings the proofs of an absolutely different state of things, using the antithesis in parallel constructions: â€Å"I had noticed that if a party was amusing she could dance till five in the morning, but if it was dull she felt very poorly and Tom had to take her home early.† In such way, without any remark, just using antithesis in order to show how Louise’s words contradict her actions, the author shows the irony of the situation: â€Å"Of course it will kill me,† she said – It didn’t kill her.† â€Å"Her friends asked her why she did not marry again. Oh, with her  heart it was out of the question, she answered – A year after Tom’s death, however, she allowed George Hobhouse to lead her to the altar.† The uttered represented speech shows the way of Louise’s usual behavior and produces the necessary effect on the reader. And even that fact that she always repeated to her husbands that she wouldn’t live long and the fact that she â€Å"outlived† both of them produces an ironic effect. I think, it is possible to say that all Louise’s life is one big antithesis, because she has lived more than forty years softly making other people do what she wants but constantly repeating â€Å"I hate the thought of anyone sacrificing themselves for me.† All people who surrounded her describe her with such epithets: â€Å"a frail, delicate girl with large and melancholy eyes†, â€Å"dreadfully delicate†, â€Å"the most gentle wife† and no one has ever thought that it was just a mask. Only the narrator has mentioned the possibility of its existence: â€Å"Perhaps she knew that I alone saw her face behind the mask and she hoped that sooner or later I too should take the mask for the face.† And only at the end of the story he reveals his true attitude to her. He expresses his irony about her behavior openly and says: â€Å"I think you’ve carried out a bluff for twenty-five years. I think you’re the most selfish and monstrous woman I have ever known. You ruined the lives of those two unhappy men you married and now you’re going to ruin the life of your daughter.† Again the antithesis is used. Firstly the narrator himself describes her as â€Å"a frail, delicate girl with large and melancholy eyes† and then from his own words she appears to be â€Å"a selfish and monstrous† and even â€Å"a devilish woman†. Only now it is possible to answer why â€Å"Louise bothered† with the narrator. Only he has seen her real face. The plot structure of the story â€Å"Louise† is as following: 1. There is no exposition. The development of the action begins from the first sentence: â€Å"I could never understand why Louise bothered with me†. 2. The rising action is almost the whole story 3. The climax is in the last dialogue between the narrator and Louise. 4. The falling action is a wedding of Louise’s daughter 5. The denouement is Louise’s death.  The elements of plot are ordered chronologically. The line of narration is straight. There are two main characters: Louise and the narrator himself, where Louise is an antagonist and the narrator is a protagonist. There are  also some flat characters such as Tom Maitland, the first husband of Louse; George Hobhouse, her second husband, and her daughter Iris. Making a conclusion, I want to say that this is a true to life story, which can happen anywhere (the author does not even point to a place where the actions have been developing). To my mind, he decided to write this story because Louise really had impressed him much. It seems to me that in some cases he even admires the ability of this woman to make everything in a way she wants it to be done. It produces such effect that she dies at the day of her daughter’s wedding only because she wants to show that she is really ill and has had right that her daughter’s wedding will kill her. I think it is very topical nowadays, because a lot of people wear their masks in order not to show their real faces and intentions.

Arranged Marriages in India Essay - 1161 Words

In American culture the view on arranged marriages are not looked at very favorably. This is because we have grown up with the knowledge that when it comes time to marry we will have chosen our spouse of our own free will. The match will be a love match and one that is chosen through our own needs. Young men and women in India grow up with an opposite view on marriage. They know that when it comes time to marry their parents will find them a suitable mate and it will be considered scared and a lifelong commitment (Agence France-Presse.) A total of 74 percent of respondents from across India voted in favour of traditional arranged marriages, according to the poll by private television channel NDTV. In the Hindu faith, marriage is†¦show more content†¦In a very small percentage of marriages that may be the case but it is not typical. Young people of the region understand that their parents know them better than anybody else and trust their choices. Matchmakers are a com mon practice in locating suitable mates. The traditional matchmaker in India is referred to as a Nayan. Normally, the nayan is a person that is familiar with the family and could be an involved friend or extended family member. They carry two basic roles: primarily as a locator of leads in relation to matches and secondary as one who negotiates among the family of the two parties involved. Several factors are taken into considering when attempting to locate suitable matches. The two main factors are the social standing of the family of the bride or groom along with reputation and also the dowry involved. When the two parties come to mutual terms regarding the marriage, the nayan can be of assistance in wedding planning and announcements in the community. They are not paid but welcome gifts in exchange for their services performed after the match is made. In modern times with social networking, internet sites are a very common tool used in the search. Control is still in the hands of the parents in suitable choices and it is quite possible for the bride and groom to not even meet prior to their engagement festivities. Dowries are a very important part of the marriage arrangement in India. TheShow MoreRelatedArranged Marriages in India2521 Words   |  11 PagesArranged marriages in India Arranged marriages continue to be normative in many Asian cultures, such as Japan, India, Korea, and so on (Applbaum, 1995). Specifically, among Hindus in India, they continue to be the most popular form of organizing a marital relationship (Mullatti, 1995). Despite globalization, modernization, and urbanization, the number of arranged marriages continues to outnumber love or self-arranged marriages. In fact, an estimated 95% of all Hindu marriages in IndiaRead MoreArranged Marriage in India Essay1534 Words   |  7 PagesArranging a Marriage in India Serena Nanda Arranged marriages in Indian society have been the norm for many centuries. Even today, an overwhelming majority of Indian people have their married arranged by their parents, or respected family members.As American we never really contemplate the idea of having someone choose our life-long partner. That’s not the case in other nations such as India, arranged marriage in India is a very common practice, yet here in the United States arranged marriages are frownedRead MoreFamily Arranged Marriages in India Versus Self-Arranged Marriages in the United States2331 Words   |  10 PagesFamily arranged marriages in India versus self-arranged marriages in the United States Marriage has been defined in numerous terms by different cultures. The factors that play into creating a successful, happy marriage are viewed differently by people in different cultures. Family arranged marriage has been the tradition in Indian culture. Modernization, globalization, and urbanization have brought about the concept of self-arranged marriage from Western cultures, such as the United States. DespiteRead MoreA Brief Note On The Movement And Exchange Of Goods, Services And Ideas1471 Words   |  6 Pagesthe spread of technology. Globalism has brought some benefits and problems. Some of the advantages are: cheaper products for consumers, integration of markets, leads to outsourcing in some cases which can lead to job losses (moving call centers to India), lowering of international barriers, helps prevent market saturation, and standardization of products. However, there are many disadvantages or problems that it has brought. Some of the disadvantages are intense competit ion, widening of the gap betweenRead MoreEssay about Marital Differences between India and the United States1132 Words   |  5 Pagesmarriages that occur in India and the United States have several dramatic differences. Marriages in India are based solely on parental decisions, whereas in the United States a marriage is based on individualism. Who, why and how the spouse is chosen, is very different in both countries. Most Americans date to discover who their future spouse is going to be, and they know the person very well before marriage. In India, dating is not something that occurs. Most individuals in India do not have anyRead MoreA Study On Arranged Marriages1715 Words   |  7 PagesProfessor Berger Research Paper Core 7 Arranged Marriages Cultures and countries around the world have differing views on many topics such as whether or not babies should be baptized, vaccinations, abortion and marriages. One topic that has been of controversy and is viewed differently in many countries is marriage and whether or not arranged marriages are better than love marriages. There are several different reasons why people in India believe that arranged marriages are the best; likewise, people inRead MoreMarriage Is An Important Part Of Their Culture And Heritage921 Words   |  4 PagesMarriage Culture For certain countries arranged marriage is an important part of their culture and heritage. Like in the essay What’s Love Got to Do with It? by Anjula Razdan, Anjula’s family that immigrated to America from the country of India believed in arranged marriage because that was the culture they were a part of before they left India. In India the grandfather chooses who he thinks is the best suitable partner for his grandchild, which is nothing like how Americans choose their life partnersRead MoreMonsoon Wedding Essay633 Words   |  3 Pages19, 2004 English 102 A Wedding in a Monsoon and a Monsoon of a Wedding Marriage is an institution that has spanned time. In India it is one of their many traditions. It has changed lives for the better and for the worse. I will be looking at two different art forms that display marriage in two different sights. One will be Monsoon Wedding, a Mira Nair film, which portrays marriage, specifically arranged marriage, in a way that looks on the tradition not as a thing of the past but a foundationRead More Arranged Marriages Essay1105 Words   |  5 Pages Arranged Marriages What is an arranged marriage? Well in the Webster’s dictionary it is defined as a marriage where the marital partners are chosen by others based on considerations other than the pre-existing mutual attraction of the partners. This habit has been very common in noble families, especially in reigning ones, at the scope of combining and perhaps enforcing the respective strengths of originary families (and kingdoms) of the spouses. A relevant part of history has been influencedRead MoreRelationship Between Independency And Autonomy883 Words   |  4 Pagesvalues, practices such as Indian arranged marriages are often seen as wild and outdated. Yet in the 2012 survey conducted in India by the NDTV, an independent TV channel, as many as 74% of respondents spoke in favor of arranged marriage. Also India is known to have one of the lowest divorce rates in the world. This evidence suggests that the matter is more complex than it may seem at first glance and I will be looking at some of the advantages of arranged marriage and reasons why, to this day, this