Tesla weathers the storm and shows first profits in two years

The last quarter of Tesla Motors (NASDAQ : TSLA) was filled with many difficulties, but the automobile manufacturer has managed to end it on a note of success. It published its first positive profits after nearly two years of losses, with a 312M $US income in the third quarter of 2018. It is only the third time that Tesla has been profitable since its introduction at the stock exchange in 2010.

It is good news for the company and their investors. The last months, Tesla and its iconic CEO, Elon Musk, have been underlined many times. The first and the second quarter of 2018 both ended with more than 700M $US of losses for Tesla, as Elon Musk was rumored to be near a complete burn-out. He announced this summer that he did not take any breaks longer than a week since 2001 and continually works 120 hours per week. In addition to the personal turmoil of the CEO, some of Tesla’s key players abandoned ship in 2018, as hope for the future of the company was thin among the ranks. In September, after a now-famous tweet where Elon Musk announced that he was going to take the company private, the SEC targeted him with a securities fraud lawsuit. He has been constrained to pay a 20M $US penalty and to resign as Tesla chairman, as the stock stumbled 14% in response to the settlement.

This year, Tesla’s share price had a variance of more than 30% and the future of the company is still uncertain. On October 24th, the third quarter reports were released showing positive profits and higher results than expected by the analysts. This trend reversal is due to the success of the Model 3, the more affordable model which starts at 34 200 $US. It has been available in North America for a year now and will be in Europe at the beginning of 2019. In this socio-economical context, where the environmental aspect is becoming increasingly important in the consumers mind, the production of an affordable 100% electric car should increase Tesla’s volume of production and sales, which should mark the beginning of a profitable, mass-production period for the company.

In the hopes that Tesla gets back on their feet after a difficult period, let’s wish that it will let Elon Musk take some vacations for once.

Bibliography

NY Times. (24 octobre 2018). Tesla Reports a Rare Quarterly Profit, Its Biggest Ever. [En ligne]. Disponible:
https://www.nytimes.com/2018/10/24/business/tesla-third-quarter-earnings.html

Bloomberg. (24 octobre 2018). Tesla’s Model 3 Surge Marks a Big Step Toward Musk’s Profit Goal. [En ligne]. Disponible:
https://www.bloomberg.com/news/articles/2018-10-02/tesla-model-3-deliveries-surge-in-move-past-musk-s-controversies

Le Figaro. (7 septembre 2018). Comportement étrange en ligne, démissions en série: la crédibilité d’Elon Musk part en fumée. [En ligne]. Disponible:
http://www.lefigaro.fr/secteur/high-tech/2018/09/07/32001-20180907ARTFIG00325-comportement-etrange-en-ligne-demissions-en-serie-la-credibilite-d-elon-musk-part-en-fumee.php

Les Echos. (19 octobre 2018). Tesla lance une Model 3 plus abordable. [En ligne]. Disponible:
https://www.lesechos.fr/industrie-services/automobile/0600002631121-tesla-lance-la-version-low-cost-de-sa-model-3-2215078.php

Le Figaro. (24 octobre 2018). Tesla devient rentable pour la première fois depuis deux ans. [En ligne]. Disponible:
http://www.lefigaro.fr/societes/2018/10/25/20005-20181025ARTFIG00178-tesla-devient-rentable-pour-la-premiere-fois-depuis-deux-ans.php

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