Tesla
CEO Elon Musk also broke some news on the conference call when he announced that Austin, Texas had been selected as the location for the new Tesla factory. The company is planning to produce the Cybertruck and Semi for all markets and the Model 3 and Model Y for the Eastern half of the country. The California factory will produce the Model S and Model X for all markets and the Model 3 and Model Y for the Western half of the U.S.
A big chunk of Tesla's revenue beat came due to an increase in regulatory credits to $428 million from $111.2 million in 2019's second-quarter. Automotive revenue was 4% lower despite the addition of the Model Y, and its efforts to increase its presence in China. However, some are attributing this to the coronavirus temporarily, depressing sales.
To increase its profits, Tesla sees its Full Self Driving software and a channel for growth, and it's also looking to lower costs by improving operations. The reaction to Tesla's earnings has largely been positive as it has seemingly overcome its two biggest challenges of the past couple of years - how to increase production and become profitable.
However, its revenues are down. In 2019's second-quarter, Tesla generated $6.3 billion in revenue with $111 million coming from tax credits, and this quarter, it generated $6 billion with over $400 million coming from tax credits.
This may be due to the coronavirus which may have temporarily affected demand for luxury vehicles. It's also led to many of its showrooms being shut down.
Stock Price Impact
Tesla is a battleground stock. Some smart people believe that the stock is going to keep gaining at the same rate and revolutionize multiple parts of the world like electric cars, self-driving, and batteries. And, some skeptics think that the company has more in common with Enron.
So far, the bulls are winning. Over the past year, the stock is up by 500%. It's also nearly quadrupled since bottoming in late-March.
It's passed an important test by successfully increasing the production of its vehicles to meet increased demand which had been its biggest obstacle over the past couple of years. And, it's the clear leader in self-driving which could be a trillion-dollar market.
That being said, the company is priced in such a way that any misstep could lead to a steep decline. It's almost 100% higher from the point at which CEO Elon Musk tweeted that the "Tesla stock price is too high IMO".
