Tesla's Stock Bump - Is the Reason Really This Simple?
Tesla earned a very nice stock bump with great news in its quarterly earnings report this week. The stock rose from a valuation of $253 per share to around $300 per share instantly. The stock jumped to that new value as soon as the NASDAQ opened for trading following the report. What is even more impressive, is that the stock has since risen another $25 per share to a valuation of $327 at the time this story was written. This after investors had a few days to really think hard about what Tesla's report included.
Tesla Stock - Profits Matter
We won't dive into every detail of Tesla's recent report here. Why bother, when you can simply click on the report and read it yourself? Taking a view from a distance, the thing that makes this report different from most Tesla quarterly reports is that the company made a profit for the quarter. As opposed to losing money. Making a profit is ultimately the point of most publically-held companies. Investors see it as important. Tesla isn't a startup anymore. It was founded by Martin Eberhard and Marc Tarpenning on July 1st, 2004. So Tesla is now in its sixteenth year of existence. Making a profit is not the only quarter-to quarter goal. But it darn sure is one of the goals investors have. Don't believe it? Look back exactly a year. In Q3 of 2018 Tesla reported a profit. Its stock rose from $258 to $354. You may want to mark your calendar for Mid October 2020 if you play the stock market. Lightning could strike 3 times.
Tesla Stock - Promises And Behavior Matter
Another interesting aspect of this quarter is that Elon Musk didn't break any new or large promises. He didn't end the unlimited free Supercharging program this past quarter, he didn't exaggerate production capabilities. He didn't even call anyone a pedophile that we can find evidence of. There was no new lawsuit by the SEC, and he didn't smoke weed on any videotaped broadcasts. It was a pretty quiet quarter. Interesting how the stock bump coincided with that.
Tesla Stock - Non-Automotive Business Matters
Tesla didn't buy any failing companies from any Musk family members in Q3. The one Tesla had previously purchased, Solar City, has been so down and out that any small bump now looks like a huge gain. Never underestimate the power of a sales bump, even for a company that has almost no sales. Tesla's non-automotive business can be an asset or a distraction to its auto business. In Q3 it was mostly benign.
Tesla's stock may have been influenced by many other factors in the past week. There is good news from China. Good news regarding vehicle development plans, and the Model Y seems to be headed to production in a bit less than a year. All of these may be helping Tesla's stock. Or, it could be the profits, since the exact same stock bump was seen exactly one year ago and none of those same factors were involved in October 2018. Maybe a solid stock price is simple after all? Profits.
In addition to covering green vehicle topics, John Goreham covers safety, technology, and new vehicle news at Torque News. You can follow John on Twitter at @johngoreham.
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