In 2003, Elon Musk founded Tesla, Inc., better known as Tesla, to pursue his interests in alternative energy and electric vehicles. Innovative solar items, energy storage devices, and electric cars have attracted public notice for the company. Tesla is the industry leader in electric vehicles in addition to revolutionizing the automotive market. We will look at the last three years’ revenue growth, operating costs, profit margins, stock performance, market value, debt levels, cash flow, financial statistics, and KPIs.
Financial Analysis
A) Revenue Growth (Last 3 Years)
For Tesla, revenue growth over the last three years is a crucial performance indicator. The increase in revenue indicates that the company is becoming more popular in the market. Let’s examine the 2020 and 2022 revenue growth for Tesla:
| Year | Revenue (in billions) | Revenue Growth |
| 2020 | $31.5 | 28% |
| 2021 | $46 | 46% |
| 2022 | $72 | 57% |
Tesla’s increasing profitability is the result of several factors. Increasing the production and sales of the company’s electric cars was the first stage. By introducing new models like the Model 3 and Model Y, Tesla has also increased the number of its customers (Shao et al., 2021). Earnings were also boosted by the company’s energy sector expansion, which now includes solar and energy storage devices.
B) Operational Expenses (Last 3 Years)
A detailed look at operating expenses is necessary to comprehend a company’s cost structure and resource management effectiveness. Research and development (R&D), selling, general, and administrative (SG&A), and other miscellaneous running costs are all included in Tesla’s operational expenses. We shall examine Tesla’s operational expenses from 2020 to 2022 in this article:
| Year | R&D Expenses (in billions) | SG&A Expenses (in billions) |
| 2020 | $1.5 | $3.4 |
| 2021 | $2.0 | $4.2 |
| 2022 | $2.5 | $4.5 |
According to Shao et al. (2021), Tesla’s growing operating expenses are a sign of higher marketing and R&D expenditures to support the business’s growth and product development. It is crucial to assess if these expenses improve the bottom line of the business and are commensurate with the growth of sales.
C) Profit Margin (Last 3 Years)
The profit margin of a business can be used as a major indicator of its profitability. This ratio shows how successfully a company can convert its income into profit. Tesla’s three-year profit margin provides insight into the company’s financial situation. This study will examine Tesla’s profit margin from 2020 to 2022.
| Year | Net Profit Margin |
| 2020 | 2.4% |
| 2021 | 5.8% |
| 2022 | 6.5% |
The reasons behind Tesla’s growing profit margin are higher sales and more effective manufacturing. The company’s initiatives to increase output and distribution, capitalize on economies of scale, and reduce manufacturing costs have boosted its bottom line (Alsharari, 2022). Regulation credits have helped Tesla’s bottom line by increasing sales of zero-emission cars.
D) Stock Performance (Last 3 Years)
The volatility of Tesla’s stock price over the last three years has attracted the attention of investors and other interested parties. A company’s stock price serves as a gauge of the state of the market, investor confidence, and overall performance. 2020 and 2022 provide a useful timeframe for examining Tesla’s stock performance:
| Year | Starting Stock Price ($) | Ending Stock Price ($) | YoY Stock Price Change |
| 2020 | $88 | $705 | 700% |
| 2021 | $740 | $1,200 | 62% |
| 2022 | $1,210 | $900 | -25% |
The company’s dominant position in the electric vehicle sector, strong financial performance, and growing investor confidence all play a part in Tesla’s stock price. Investors are interested in Tesla because of its potential for expansion and market dominance (Alsharari, 2022). Additionally, the company’s presence in important stock market indices, such as the S&P 500, has increased demand for its shares.
E) Latest Market Value
By calculating the current stock price of Tesla by the total number of outstanding shares, one can ascertain the company’s most recent market worth. Tesla’s stock price was $928.13 as of November 6, 2022 (as previously noted). The most recent annual report or financial filings will provide the total number of outstanding shares. We will use an estimated number of outstanding shares for this analysis, which at the end of 2021 was roughly 950 million shares.
Latest Market Value = Stock Price x Outstanding Shares
Latest Market Value = $928.13 x 950,000,000
Latest Market Value = $881.72 billion
Thus, Tesla, Inc.’s market worth is $881.72 billion as of November 6, 2022. Tesla’s valuation puts it among the world’s most valuable firms, indicating market confidence in its expansion.
F) Debt (Short & Long Term)
Tesla has short-term and long-term debt. The corporation finances its operations and growth with debt. The latest financial reports show debt figures:
- Short-Term Debt (as of September 30, 2022): $6.74 billion
- Long-Term Debt (as of September 30, 2022): $13.96 billion
Long-term debt lasts longer than a year, while short-term debt must be paid off within a year. Short-term and long-term debt total $20.70 billion for Tesla.
Tesla has borrowed to create Gigafactories, conduct research, and increase manufacturing capacity (Huang, 2019). The company’s improving creditworthiness and financial performance helped it get debt financing.
G) Cash Position (Last 3 Years)
Cash position is vital to a company’s liquidity and ability to meet short-term financial obligations. Consider Tesla’s cash situation over the past three years:
- 2020: In 2020, Tesla reported cash and cash equivalents of approximately $6 billion.
- 2021: In 2021, Tesla’s cash and cash equivalents increased to around $15 billion.
- 2022: For 2022, Tesla’s cash and cash equivalents are estimated to be approximately $18 billion.
Several variables, including increased sales, operating cash flow, and successful capital offerings, are responsible for Tesla’s better cash position (Huang, 2019). The company has been able to fortify its balance sheet and keep a solid cash reserve thanks to its capacity to draw in investments and earn cash from its operations.
- H) Financial Ratios (Current, EPS, P/E, ROE)
Financial ratios provide a more in-depth analysis of a company’s financial performance and health. Let’s examine some key financial ratios for Tesla:
| Ratio | Value |
| Current Ratio | 1.28 billion |
| Earnings Per Share | $5.51 billion |
| Price-to-Earnings (P/E) Ratio | 168.34 billion |
| Return on Equity (ROE) | 22.64% |
Financial ratios are essential for assessing a company’s financial health and performance. The following key financial ratios for Tesla are provided:
- Current Ratio:
The current ratio is a measure of a company’s ability to cover its short-term liabilities with its short-term assets. It is calculated as follows:
Current Ratio = Current Assets / Current Liabilities
For Tesla, the current ratio can be calculated based on the figures from the latest financial report. As of September 30, 2022:
Current Assets = $26.60 billion Current Liabilities = $20.84 billion
Current Ratio = $26.60 billion / $20.84 billion = 1.28
The current ratio of 1.28 indicates that Tesla has more current assets than current liabilities, suggesting a healthy short-term financial position (Huang, 2019).
- Earnings Per Share (EPS):
Earnings per share is a key indicator of a company’s profitability and is calculated as follows:
EPS = (Net Income – Preferred Dividends) / Weighted Average Number of Common Shares Outstanding
For Tesla, the EPS can be calculated based on the net income and weighted average shares outstanding from the latest financial report. As of September 30, 2022:
Net Income = $5.24 billion Weighted Average Shares Outstanding = Approximately 950 million
EPS = ($5.24 billion – 0) / 950 million = $5.51
Tesla’s EPS of $5.51 reflects its profitability and earnings attributable to each common share (Kikkas, 2020).
- Price-to-Earnings (P/E) Ratio:
The P/E ratio is a valuation metric that compares a company’s stock price to its earnings per share. It is calculated as follows:
P/E Ratio = Stock Price / EPS
For Tesla, the P/E ratio can be calculated based on the stock price and EPS as of November 6, 2022, and the latest EPS:
Stock Price = $928.13 EPS = $5.51
P/E Ratio = $928.13 / $5.51 = 168.34
Tesla’s P/E ratio of 168.34 indicates that investors are willing to pay a premium for the company’s earnings, reflecting high growth expectations (Kikkas, 2020).
- Return on Equity (ROE):
ROE is a measure of a company’s profitability about its shareholders’ equity and is calculated as follows:
ROE = Net Income / Shareholders’ Equity
For Tesla, the ROE can be calculated based on the net income and shareholders’ equity from the latest financial report. As of September 30, 2022:
Net Income = $5.24 billion Shareholders’ Equity = $23.16 billion
ROE = $5.24 billion / $23.16 billion = 22.64%
Tesla’s ROE of 22.64% demonstrates its ability to generate a favorable return for shareholders’ equity (Kikkas, 2020).
I) Key Performance Indicators (KPI)
Key performance indicators (KPIs) are essential metrics that provide insights into a company’s performance and help in evaluating its strategic goals and objectives. Let’s examine some key performance indicators for Tesla:
- Vehicle Deliveries: Vehicle deliveries have been steadily rising for Tesla (Jenová et al., 2019), making this metric an important indicator of market demand and manufacturing efficiency. New estimates place Tesla’s 2021 deliveries at around 936,000, an increase from the previous year.
- Gigafactories and Production Capacity: As seen by the expansion of its production facilities, including Gigafactories, Tesla is dedicated to raising output. To meet the growing demand for electric cars, Tesla has constructed more Gigafactories throughout the world.
- Supercharger Network: The Supercharger network is essential for Tesla users to rapidly and conveniently charge their vehicles. The availability and growth of the network are critical to Tesla’s customer happiness and EV adoption.
- Energy Products Installation: Solar panels, solar roofing, and energy storage solutions are among Tesla’s key performance indicators for the installation of energy goods (Jenčová et al., 2019). The increasing number of these goods being installed suggests that clean energy solutions are being adopted more widely.
- Research and Development Investment: Tesla’s R&D investment KPI shows its commitment to research and development (Jenčová et al., 2019). Innovation is key to the company’s EV industry competitiveness.
Conclusion
Interesting details regarding Tesla, Inc.’s expansion and achievements during the previous three years may be found in this financial analysis of the company. Reiterating its leadership in the markets for clean energy solutions and electric vehicles, Tesla has demonstrated strong profit margin expansion, strong revenue growth, and strong stock performance. Even with its high debt load, Tesla warrants a more thorough examination of its financial situation and its ability to continue making loan payments. The company’s good financial statistics and growing cash reserves demonstrate increases in liquidity and financial strength. Key performance indicators (KPIs) that are crucial for assessing Tesla’s strategic objectives and achievements in the clean energy and electric vehicle sectors are the company’s car deliveries, gigafactories, Supercharger network expansion, energy product installation, and R&D expenditure. Tesla’s performance during the last three years, despite possible influences from market dynamics, competition, regulatory changes, and sustainability trends, shows its tenacity and dedication to building the energy and transportation of the future.
References
Shao, X., Wang, Q., & Yang, H. (2021). Business Analysis and Future Development of an Electric Vehicle Company–Tesla.
Alsharari, N. M. (2022). Financial reporting and analysis of Tesla green technology in the United States market. Banking and Accounting Issues, 3.
Kikkas, O. A. (2020). Financial performance assessment of Tesla, inc., and Nissan motor company.
Jenčová, S., Vasanicova, P., & Litavcová, E. (2019). Financial indicators of the company from the electrical engineering industry: the case study of Tesla, inc. Serbian Journal of Management, 14(2), 361-371.
Huang, Y. (2019, February). A Potential Company or Not: the Analysis of Tesla. In 2019 4th International Conference on Financial Innovation and Economic Development (ICFIED 2019) (pp. 401-407). Atlantis Press.
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