Telsa Motor Company (Research Paper Sample)

Stock Research Paper
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Stock Research Paper
A Telsa motor is an American based company that engages in the manufacture of electric vehicles as well electric train parts. The company is listed in stock exchange market and its shares are traded in the public since the company is a public company. This paper evaluates the performance of the company stock as well as other factors that would have affected the value of the company stock. Ratios and trends that are based in the company financial statements are evaluated in the paper. Considering that the company promotes the use of green energy which is recommended worldwide, lit will be interesting to know whether the company is able to create value for its shareholders. Based on the analysis, one can project whether the company is worth investing in.
Why the Telsa stock is good stock
Telsa as a company has a great future and this makes its shares very attractive to invest in. the world has been concerned about the levels of the environmental pollution and the interests have been on ways of reducing use of hydrocarbons. Other motor vehicle companies have started designing and manufacturing vehicles that can use green energy. The advantage with Telsa is that it has specialized, made and tested vehicles that use green energy. This means that it will be ahead of the other companies when it comes to production of the green energy vehicles. Green energy is cheap and more customers will be interested in buying these vehicles (Telsa, n.d). As the demand for the vehicles increase, the revenues for the company will continue increasing and this will lead to an increase in the value for company shares.
The sales of a company tell whether a company is increasing its market share and whether it will be able to sustain its operations in the future. Looking at the income statement of the company, the sales revenue of Telsa motors increased by 387.22% from the year 2013 to 2013. This shows a breakthrough of the company in the industry. It shows that the company has increased sales greatly through capturing new customers who have realized the importance of their products. This is expected to be reflected on the net profits of the company and also on the value of company shares.
The net profit margin for the company in the year 2013 was -3.67%. This was an improvement from the previous value of -96.87% in the year 2012. Additionally, the value represents 81.32% increase in the net profits for the company. Everyone would be worried about a company that makes negative profits since this has an adverse effect on the value of the shares. However, Telsa motors witnessed a tremendous increase in the profits generated (Yahoo finance 2014). The company has previously invested in technologies and research that has enabled it design and manufactures the new vehicles. In the future, the expectations are that the company will not incur such costs and this will be an advantage to the company as compared to the competitors who will have to incur similar costs. The future profitability of the company is expected to be positive as the company is now generating huge revenues at lower costs. This will have a positive effect on the value of the company shares.
Risks that the company faces
The risks that are associated with the company and may affect the value of the company shares relates to counterfeiting. Since many other motor vehicle companies know that Telsa motors is has succeeded in production of the green vehicles, there are chances that these companies will copy what the company has researched and designed to come up with their own products. This means that the companies will not incur as much costs as Telsa motors has incurred and will easily take away the company customers. This means that Telsa Corporation may not be able to recover the costs that it incurred in the research and design of the vehicles. However, Telsa management has the ability to ensure that such companies are sued and prevented from counterfeiting.
Other risks relate to demand for the company products. The products as per now are very expensive since the company is interested in recovering the costs it incurred in the research activities. This means that it will take a lot of time before the sale of the vehicles increase. The management has to develop a strategy to ensure that the price of its products is not a barrier in their success. The company can lower the prices of the vehicles and still be able to recover the costs in the future.
New products
The company first made Telsa roadster which is a sporting vehicle that interesting to many people. The second model is Luxury sedan that targets the high income class in the society. The company recent models are model X and model 3. This has proved to the customers that the company can produce vehicles that target various classes in the society. The vehicles can also be designed for use in certain tasks such as sporting events. People are now gaining trust in the company and the expectations are that the company will be able to differentiate itself from the competitors and achieve success in the industry.
Company corporate strategy
The interest of Telsa is to manufacture the most affluent vehicles and sell them at extremely very high prices to the rich class in the society. As the company increases its production units and sells more of its output to the customers, the prices is expected to reduce since the company will have recovered the investment costs incurred during research and technological development. The aim of the company has been to produce the highest quality in the industry and become a market leader. In the future, the company intends to target more customers and avail products at a lesser price. The quality of the products will be high and if availed at lower prices, there are no doubts that the company will generate huge revenues in the future.
Its future strategy will be to increase the volume of its sales hence generate more revenues. This tells that in the future, the company will be leading in the production of green energy vehicles.
Company share price from 5th February to 5th march
It should be pointed out that the price of the company shares reduced significantly in the previous month. The price reduced from $225 per share to the current $202 per share. This is a great lo...