News By/Courtesy: Athul Jospeh | 30 Jun 2020 16:09pm IST

HIGHLIGHTS

  • Tesla has been on a roller coaster ride of market sentiment in recent years, but the electric car company is starting off the new decade on a high note.
  • Within three years of Tesla’s founding in 2003, Elon Musk had invested $55 million of his own money in the company.
  • Over the last nine , that revenue increased 91% from a year earlier.

Elon Musk just did the unimaginable thing. Despite setting ambitious production goals and backing up Wall Street, Tesla overcame $100 billion ( £ 76.3 billion) in January to become the second most successful carmaker in the world – behind Toyota alone. It's been tough for the last 12 months. Tesla set the target of delivering between 360,000 and 400,000 vehicles in 2019 and, having missed its quota in the summer, committed to manufacturing 105,000 vehicles in its final quarter to meet the low end of its full-year outlook. Now, things seem to be turning around. This week, US President Donald Trump labeled Musk a "genius" and said he had done a "very good job" during an appearance in Davos. Aswath Damodaran, a professor of finance at the Stern School of Business at New York University and a specialist in market valuation, says that Tesla 's rise over the last six months can largely be attributed to one thing: musk has been uncharacteristically quiet. Several analysts compare Musk 's conduct to that of a teenager—"[Tesla] has so much promise, but Elon Musk has found ways to mess it by tossing out distractions"—and argues that he is the greatest danger to future development.

Unlike private companies, the value of any public company is meant to be easy to calculate; after all, it is determined by the share price. The share price is closely tracked by market analysts who measure the stock price trend to determine the general health of the company. We suggest purchasing or selling based on earning history and price-to-earning ratios, which show that the company's share price represents its earnings properly. All of these data allow analysts and investors to assess the long-term viability of a product. But the decision-making behind what is worth to an organization is more emotional than statistics. In the case of Tesla, business insiders say that Musk has the "Steve Jobs" factor and that the company is riding a wave of goodwill as eco-conscious consumers turn to electric vehicles. More importantly, Tesla is followed by a massive cult-like customer, and historically very little competition in space. That's what the Tesla dial is moving for, market insiders say – and that's likely to continue. Against the cult of Musk, other car manufacturers, such as General Motors, Ford or VW, who have baggage in petrol and diesel space, find it difficult to compete. This power of brand awareness, earning estimates and market demand may easily overstate the value of a company-and Tesla's $100 billion mark-up could soon be a prime example of this[ii]. Analysts, who have a track record of determining when businesses are overhyped, claims that the best metrics to be used are whether a company valuation is "possible, probable or likely." If the scale of the market makes the growth possible, if the statistics make it feasible, and if future projections make it inevitable, the optimism will live.

THIS ARTICLE DOES NOT INTEND TO HURT THE SENTIMENTS OF ANY INDIVIDUAL, COMMUNITY, SECT, OR RELIGION ETCETERA. THIS ARTICLE IS BASED PURELY ON THE AUTHOR'S PERSONAL VIEWS AND OPINIONS IN THE EXERCISE OF THE FUNDAMENTAL RIGHT GUARANTEED UNDER ARTICLE 19(1)(A) AND OTHER RELATED LAWS BEING FORCE IN INDIA, FOR THE TIME BEING.

Section Editor: Pushpit Singh | 30 Jun 2020 17:12pm IST


Tags : tesla Elon Musk Innovative

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