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Disclaimer: This article is not to be taken as financial advice
Do true numbers sell in the media these days? Probably not. But do they really dictate the markets in the long run is what can be traced down historically? The figures as we say, never lie and at the same time are not interesting enough to display. The glitzy profits spearhead the headlines on the big boards in this era of digitalisation, overlooking the real data like demand and supply. For the longest time, companies have been mistaken with their owners, and their personal lives with their business acumen, completely disregarding the people working in the company. This is the casual ignorance of the basic accountancy principle – a company is a separate legal entity- distinct from its owners.
Let’s zoom into the numeric truth behind the commentated downfall of the biggest and one of the earliest electronic automobile companies – Tesla. The criticism of its owner is loud and clear, which often leads to an astonishing drop (or rise) in its stock prices. We’re going to compare this impact of commentary with actual factual information present.
The market capitalisation (the total value of shares) of Elon Musk’s company Tesla presently stands at $616.24bn. This value is more than the combined value of its competitors and legacy automakers including Toyota, Ford, Volkswagen, Daimler, and General Motors. The figure clearly cements its place as the ruler in the hood despite the volatility the stock has shown.
The only electronic vehicle company that could probably stand next to Tesla or pose a challenge to its monopoly in the future is the Chinese automaker BYD CO LTD which focuses on the affordable electronic vehicle market. The lone warrior’s yearly growth rate has seen a tremendous rise which was around 5 times that of Tesla. Though the stock shows strength and the financials come in its support, the scarce margin comes in its way. High sales of the company still fall behind the qualitative profits made by the front runner. In addition to this, the economic sanctions levied against China puts the future under heavy speculation proving that it still has a long way to go. The veteran automobile giant like Mercedes could also jump into the party taking in view its 124% increase in the electronic segment. The stability in the Mercedes stock makes it way more recession-proof from its competitors. Although the brand name and the stock make it a potential competitor the naked truth is that it only works in the topmost luxury models and gains a major part of its revenue from the combustion engine vehicles, hence has an underdeveloped operational structure and production capability in the electronic world.
The catchup for any other company has looked like a distant dream if the numbers are taken in context from early 2020. The recent financial reports also narrate a very similar story when it comes to profitability, hence again questioning the so-called decline of Tesla declared only on the basis of a dip in the stock prices. Furthermore, the health of the company can also be evaluated from the increase its earnings per share (EPS) has witnessed over the past few years, which currently stands close to four times more than what it was in 2020. The constant increase in the revenue and the net income even during COVID-19 displays the strength of the business.
The financials of Tesla discussed showcase the technical fallacy of the newsmakers in addition to the problems caused when the owner and the ownership are not separated. Elon Musk on personal levels might have gotten into many controversies in the past few months but the business was intact then and is running smoothly even today. Separation of personal and professional lives in any field is paramount and must be respected. This review dives into comprehending the other side of the coin while providing numerical backing.
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Wonderful observation by the writer. Time will definitely turn around accordingly.
Very well written piece
The way you explain this topic in an easy-to-understand way is really impressive. Good Job 👍
The article is well thought out and the comparison with other major players was also informational in giving an idea of the current market players. Furthermore, these companies could try to replicate what Elon has done with Tesla.
Well-researched and thorough.
Very well written and researched article. Good job.
The competitor analysis is very informative and easy to understand. The topic is thoroughly research and insights are well presented.