Tesla on track for S&P 500 after fourth consecutive quarterly profit | Economic news

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Tesla’s shares rose after the electric carmaker’s latest results showed it had overcome key challenges posed by the coronavirus crisis.

The company posted a profit for a fourth consecutive quarter in the three months ending in June, meaning it becomes eligible to enter the prestigious S&P 500 index for the first time after a meteoric rise in its stock in recent years. month.

Stocks rose more than 6% after hours despite a slight drop in sales over the period, although they still exceeded analysts’ expectations.

Total second-quarter revenue was just over $ 6 billion, up from $ 6.35 billion a year earlier and net profits of $ 104 million.

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Elon Musk Maintained Company’s Annual Target For New Vehicle Deliveries Despite ‘Hardship’ Of COVID-19 Crisis

Analysts attributed the latest surge in stock prices to the company’s prediction that it would meet its earlier pledge to deliver half a million vehicles worldwide this year.

This was despite the forced and temporary closures of its factories in California and China due to coronavirus pandemic which delayed production schedules.

The performance helped Elon Musk, the firm’s outspoken and colorful chief executive, qualify for a $ 2.1 billion bonus tied to the value of Tesla shares which reached record highs earlier this week.

The interest in the company’s shares is such that it rose 5% under extended trading even before the results were released.

Tesla has seen a staggering over 300% increase in market value since January, helping it become the world’s most valuable listed automaker, edging out Toyota.

Entry into the S&P on Wall Street will likely only send its share price even higher, as funds will be forced to buy.

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Tesla is also a major player in energy storage

Tesla’s so-called market cap is now worth more than Ford, General Motors, Honda, Fiat Chrysler and Daimler combined with a market value that currently hovers just below $ 300 billion.

Musk, also famous in Space X, owns just over 13% of the company’s shares.

Elon Musk unveils the Cybertruck
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Tesla has already announced plans to take on GM and Ford with a Cybertruck

That stake propelled him this week as the fifth richest person in the world, his net worth surpassing the $ 74 billion mark – at least on paper.

The acceleration of Tesla’s share this year can be explained by several factors.

The main reason investors bought Tesla in droves is because it has already captured the space its competitors aspire to: the high end of the electric car market.

The holy grail, if you will, is self-driving cars, and Musk announced earlier this month that Tesla is “very close” to achieving a fully autonomous system.

Its exposure to energy storage and solar power is also compelling as part of global efforts to tackle climate change by reducing carbon emissions.

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