Tesla: Creating a revolution in the luxury car industry

If you are somewhat familiar even a little bit about stocks and have an interest in investing, you probably have heard about the recent boom of Tesla Motors (NASDAQ: TSLA) stock. Recently, the stock went as high as $110 a share; this was a 103% increase over a one month period and a 247% increase over a 3 month period.Source: AutoBlog

So you may be thinking, what caused this sudden increase and growth? Tesla stock first jumped 31% on May 8th when it announced its First Quarter sales to be $562 Million and recorded  first quarterly profit in its 10-year history of $15 million.  In a letter to shareholders, CEO Elon Musk mentioned that Tesla delivered 4,900 electric vehicles as well as other important figures. One of them being that their gross margin doubled from 2012 to 17 percent. This was made possible due to better use of raw materials, smarter inventory management, and a reduction in the hours required to build each car by 40 percent over the quarter.

In the first quarter of the year, Tesla delivered more than 4,750 Model S vehicles in the US which when compared to the more traditional luxury car brands such as BMW 7-series and Mercedes S Class, is much higher. BMW sold 2,338 7-Series models in the first quarter while Mercedes sold 3,077 S-Class models. The demand for their most popular model, Model S, is projected to be around 20,000 units per year in North America and in Europe, the current order rate is 200 per week. In order to meet these demands, they have added some changes to their manufacturing process which should drive margins higher.

Some of these changes include:

(1) a reduction in temp workers since the beginning of the      year

(2) increased efficiencies and reduced scrappage both at supplier and in-house production sites

(3) a streamlining of operations leading to a further reduction in full time employee man-hours from 60-70hrs/week previously to 40-50 hrs/week currently

(4) a significant improvement in logistics costs.

 

Currently their body assembly and finished assembly are still running on a 2 shift basis so the main goal of the production team right now is to get production levels of 20,000 on a single shift across most processes.

With the Tesla Model S being a luxury car and priced at $62,400, I feel that its affordable and much better then other cars. Do you see Tesla continuing to be as successful as they are now and do you think their stock price will continue to go up as it is now? As I mentioned earlier, they out sold Mercedes and BMW luxury models, do you think that will continue to happen in the future as well? What would you rather have, Tesla or other traditional luxury car models?

 

 

http://venturebeat.com/2013/05/08/tesla-stock-jumps-almost-20-after-record-562m-in-sales-and-first-ever-quarterly-profit/

http://www.valuewalk.com/2013/04/tesla-motors-inc-tsla-model-s-sells-more-than-mercedes-and-bmw/

http://www.valuewalk.com/2013/05/tesla-motors-inc-tsla-envisions-selling-around-500k-units-long-term/

The Fall of Apple?!?!?

There has been tons of speculation recently about the way the most interesting company in the world, known as Apple, is headed. Stock prices fell below $400, an over 40% decline since an all time high last September. The company has not introduced a new product in over six months and it will be at least another three by the time a new one is available in the marketplace. Lastly, competition is rising as the  HTC One and Galaxy S4 are slated to be on the market soon which could lead to a decrease of sales of the iPhone. Apple will release its quarterly results next Tuesday April 23rd and the numbers are expected to fall short of Apples quarterly forecast, which will decrease the stock price even more.

While there is cause for concern, as with any major corporation, Apple does have many thing to look forward to with one of them being customer loyalty, great management, and near future product releases.

There is not a consumer base out there that are as loyal as Apple consumers. An easy way to prove this is look around any DePaul classroom. First of, the vast majority of students have some a Macbook as their laptop. A greater portion of these students also have an iPhone as their phone. Finally, I would bet that these students also listen to iPods on their morning commutes to school or work. To truly find a company that has better customer loyalty would be a task in itself.

Another reason that Apple will rebound is because they have great management. Many people say that Steve Jobs made the company what it is today. That is true in a way but the support and management around Jobs had to be up to his level as he could not control every part of the company. Apple did not become one of the most valuable companies in the world because of one person.

Many investors proclaim that the reason the stock price is falling is because Apple has not released any new products. That is about to change in the upcoming months as there are speculations the new version of the iPhone is slated to come  out late this summer. When Apple states the new iPhone release date, that alone will boost stock price. As shown by the image to the right, stock prices increase significantly when a product is released.

 

 

 

As we know, Apple has been one of the most dominating and valuable companies in the world. Recently stock prices have dropped over 40% and sales are predicted to fall short of the quarterly forecast. Many loyal consumers are waiting for the next big thing from Apple but the company is not delivering. What do you think about Apples recent struggles? Has Apple really lost its touch in the market as competition is constantly increasing or will the release of the new iPhone restore Apples value and investor confidence in the company?

 

Sources

http://theweek.com/article/index/242933/apples-stock-price-reaches-new-low-why-are-investors-so-jittery

http://www.forbes.com/sites/gregsatell/2013/04/17/whats-going-on-with-apples-stock/

http://www.pcadvisor.co.uk/news/mobile-phone/3436742/iphone-6-release-date/

http://www.forbes.com/sites/rogerdooley/2012/07/17/apple-enemy/