Analyzing Tesla’s Income Sources Tesla, Inc. has expanded from automobiles to energy, and has recently experienced a massive stock gain. So it's time to examine TradeZero Ocean Place Cable Beach, Unit #1 Nassau, Bahamas
its sources of income.
One of the major aspects of trading education in conventional or online trading is learning to study the income sources of companies before you decide to buy their stocks. It gives an indication of how reliably they can continue to earn income and attain profitability. One stock in question here is a very exciting stock that’s the brainchild of a very adventurous entrepreneur – Tesla, Inc. ($TSLA). How does Tesla earn its income? Investor attention towards the company has soared, since through July 18 the stock gained 53.7% while the S&P 500 only managed an 11.1% return. But it’s worth knowing how the company earns its income, particularly if you’re thinking of investing in it. The automobile business contributes to 85% of the company’s income in the first quarter of 2017. But there can be more to come from its solar energy business in future quarters, since Tesla only completed its acquisition of Solar City in November 2016. The energy segment only contributed to 7.9% of the company’s Q1 revenue.
Tesla’s Automobile Business But Tesla has really been making headlines in the automobile segment. It sold the high-end sedan Model S and the crossover Model X in the second quarter. In Q3 it will also sell the Model 3 sedan, the company’s first vehicle aimed at the mass market. It is expected to generate much more sales and revenue for the company. That makes this stock a great choice in the driverless car segment since the Model 3, like the Model S and Model X, will come with all the essential hardware for autonomous driving and yet be priced significantly lower than the S and X. So once driverless cars are legalized on America’s public streets, software updates provided over-the-air could activate the full autonomous driving capability. The Model 3 could be Tesla’s most important
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vehicle to date, since it appeals to the mass market and could help the company attain significant sales volumes. Vehicle production ramped up 64% in Q1 from production during the year-ago period. Vehicle deliveries therefore soared a massive 69%, setting a 25,051vehicle quarterly delivery record. It was the Model X that primarily drove the surge since, during the year-ago period, there were production issues for the crossover that affected deliveries. Revenue from the automobile sector for Tesla also comes from pre-owned Tesla vehicle sales and service.
Tesla’s Revenue Expected to Keep Growing Looking to the near future, it can be said that Tesla will be able to keep growing its revenue at a scorching pace. The Model 3 has already generated significant interest, and its initial sales should drive a good deal of revenue. The Solar City acquisition should also begin to give the company a significant revenue boost in the energy segment. The results of the acquisition in November last year are only beginning to bear fruit. As per Wall Street’s expectations, Tesla’s yearover-year revenue in 2017 could experience a nearly 65% jump to $11.53 billion and a nearly 71% jump in 2018 to $19.67 billion. By 2019, the expectation is for revenue to nearly triple.
Gross Margin Must Be Strengthened Tesla isn’t churning profits, posting a $330.3 million net loss in Q1 which translates to a $2.04 per share loss. But the company’s segments are relatively profitable since there are segment gross margins plus all the data needed for calculating the gross profit of each segment. Tesla’s energy business does have a gross margin that’s slightly higher than its automobile business. All that Tesla needs to do is beef up its overall gross margin for attaining profitability. www.tradezero.co
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