3 Reasons to Buy Tesla Stock Like There's No Tomorrow


Tesla (NASDAQ: TSLA) shares opened higher on Thursday after a better-than-expected quarterly report. Critics will point out that an already overvalued stock is now even more richly priced. Folks upset about Elon Musk’s political antics will argue that the gains can’t last for a divisive and mercurial CEO.

However, Tesla has traded higher — much higher — than it is right now for a good chunk of time. There was also a lot of meat in Wednesday afternoon’s financial update to encourage a long-term bullish mindset for the country that made electric cars viable and aspirational. Let’s look at some of the reasons why now might be a good time to buy Tesla stock like there’s no tomorrow.

Revenue rising 8% to $25.2 billion for the three months ending in September isn’t necessarily impressive. Investors already knew that vehicle deliveries for the quarter were preannounced as a 6% year-over-year increase. Average selling prices are moving lower, but given the Tesla ecosystem of subscriptions, accessories, and Supercharger outposts, it’s easy to see why revenue is about more than just the initial sale.

Boo birds will point out that Tesla is experiencing an unsustainable boost by selling regulatory credits to automakers. There’s also the automaker’s booming energy generation and storage business padding results. It still doesn’t take away from its blowout performance on the bottom line.

Net income soared 17% to $2.2 billion for the quarter, more than doubling its top-line gain. Tesla has slashed prices on everything from its cars to subscriptions for its autonomous driving platform. Its operating margin still clocked in at 10.8%, well above the 7.6% it posted a year earlier. The bottom line is now finding a way to shine.

This is Tesla’s strongest revenue growth in a year, and the first time margins have widened and profits have outpaced the top line in more than a year. It was a refreshingly upbeat report.

Someone at a Tesla Supercharger station with a hand on the charger.
Image source: Getty Images.

There’s no shortage of video clips online showing Tesla’s Full-Self Driving platform at its worst. It launched a couple of years ago in beta. There will be bugs. However, the subscription platform that automates the driving experience continues to get better with every update.

Tesla points out that the ratio of miles to interventions — or how many times someone has to take over for something that the car is missing — keeps getting better. A crash on autopilot is now statistically less likely to happen than with a human behind the wheel. It may never be perfect, but it’s a win if it’s safer than the owner behind the wheel.



Source link

About The Author

Scroll to Top