Tesla's Meteoric Stock Rise and What Led Up to It
Whether you like it or not, the future is looking bright for Tesla as we enter 2020. At the time of writing this, Tesla’s stock is currently at $537 which has doubled over the last three months. CEO Elon Musk is also set to get compensated for the success of his company once the stock hits a certain point, as he currently doesn’t have a salary. Tesla, founded in 2003 with big plans, has not been an instant success and numerous obstacles and setbacks have held the company back. Musk himself has caused some controversy for the company on multiple occasions, whether by smoking marijuana on a podcast to keeping a very non-professional image on his twitter account to struggling to meet certain claims with his new Cybertruck.
First, let's get the recent bad news out of the way. In November 2019 at an event in Los Angeles, Musk unveiled the all-electric Cybertruck with its stainless-steel body and “bulletproof glass”. However, while Musk was testing the futuristic pickup on stage, he had someone throw a metal ball at the driver side window to test his resistance claim. This lead to the window being shattered, which he nervously laughed off and said there is “room for improvement” and “at least it didn’t break through”. After the event, Market research firm Piplsay polled just over twenty-one thousand Americans about the Cybertruck, and only twenty nine percent of the consumers had a positive response to the pick up truck (Dellinger). Although at least two hundred and fifty thousand people pre-ordered their Cybertruck, they only had to put down $100 and it is fully refundable before orders are being processed and delivered in late 2021.
Besides the blunder of the unveiling of the Cybertruck and the negative reception that came with it, Musk has done other things to put Tesla and himself in a controversial light. In September of 2018, he made an appearance on one of the world’s most popular podcasts, the Joe Rogan Experience. During the interview, Rogan offered Musk a joint (as he does with all guests on the show) which contained both marijuana and tobacco. Musk accepted and took a singular puff of it on camera. Even with marijuana use being legal for recreational use where the podcast was recorded in California, Tesla’s team and Wall Street didn’t respond cordially. After the show was live-streamed, Tesla’s share crashed 6 percent, and two senior executives quit as well. Head of human resources Gaby Toledano and head of accounting Dave Mortonboth left, as Morton was only working at Tesla for a month and stated the reason was due to the “level of public attention placed on the company”. As for Toledano, she was already on a leave of absence, and it can be safe to assume that the news of Musk smoking weed influenced her decision to leave (Neate/Wong).
As soon as the calendar flipped to 2020, things seem to be moving in the right direction for Tesla however. As previously mentioned, their stock has increased rapidly since the start of Fall 2019. On September 24th, Tesla’s (TSLA) stock price was at $242. The stock now has hit $537, showing that it has more than doubled in just about a quarter of a year and that the company is now worth around $95 billion. The electric car manufacturing company is now the most valuable one in America, and it’s worth more than General Motors ($50 billion) and Ford ($37 Billion) combined (Lee).
What is interesting about Tesla’s financial success is that they haven’t sold nearly as many cars as Ford and General Motors. Although they have been more productive in 2019, they barely reached their total annual car delivery goal of 360,000 cars for the year, with them having sold only 367,500. This is very minuscule compared to General Motors, as in quarter two of 2019 alone they sold 737,279 vehicles, almost doubling Tesla’s sales for the whole year (Wagner/Lee).
So why has Tesla increased so much recently?
A few factors come into play, one of them being previously mentioned is that they are finally hitting their delivery goals along with the fact that they own one of the largest shares in the electric-vehicle market at around 17% (Stankiewicz). Another reason it has surged so much as of late is the fact that analysts are very optimistic about the company’s future. One analyst noted for her strong belief in Tesla is Ark Investment Management founder Catherine Wood. She believes Tesla can be worth more than $6,000 per share in the next five years. She originally predicted back in February 2018 that it was going to trade at $4,000 per share. In justifying her new prediction, she believes that their presence in the autonomous vehicle field puts them ahead of other car manufacturers. She said “the winner in autonomous platforms, and in any artificial intelligence project, is that company with the most data and the highest-quality data ...That company is Tesla” (Langois).
With this recent streak of success for Tesla, they have already executed some plays overseas to start out the new decade. Musk recently opened a new plant in Shanghai, China that is currently assembling 1,000 cars per week. Facility manufacturing director Song Gang said that they want to double this number by the end of the year, and want to eventually produce 150,000 Model 3 vehicles annually, or approximately 3,000 per week (Hull). Tesla also plans to open a design/engineering center in China as well, as of now they are only producing cars there and he wants to make “Chinese-Style” vehicles. Tesla may finally be in open skies after the turbulent controversy of the last few years, as they move ever closer to hitting their CEO’s earnest goals.
Works Cited
Dellinger, AJ. “Bad News, Elon Musk: Survey Finds Most People Don't Like How The Tesla Cybertruck Looks.” Forbes, Forbes Magazine, 19 Dec. 2019, www.forbes.com/sites/ajdellinger/2019/12/19/bad-news-elon-musk-survey-finds-most-people-dont-like-how-the-tesla-cybertruck-looks/#476d6c0ad5e8.
Hull, Dana. Tesla Opens Chinese Plant as Era of Real Competition Begins, www.msn.com/en-us/money/companies/tesla-opens-chinese-plant-as-era-of-real-competition-begins/ar-BBYGHS0?ocid=00000000.
Neate, Rupert, and Julia Carrie Wong. “Tesla Shares Crash after Elon Musk Smokes Joint on Live Web Show.” The Guardian, Guardian News and Media, 7 Sept. 2018, www.theguardian.com/technology/2018/sep/07/tesla-chief-elon-musk-smokes-marijuana-on-live-web-show.
Stankiewicz, Kevin. “Tesla Going to over $6,000 per Share, Says Money Manager Who Originally Predicted $4,000.” CNBC, CNBC, 14 Jan. 2020, www.cnbc.com/2020/01/14/ark-invest-catherine-wood-tesla-stock-going-to-over-6000-per-share.html.
Wagner, I. “General Motors - Vehicle Sales in the United States 2019.” Statista, 14 Oct. 2019, www.statista.com/statistics/239968/general-motors-vehicle-sales-in-the-united-states-by-segment/.
