Using Analytic Techniques to Add Meaning to Data

Tesla Overview

Tesla has been the purveyor of the transition into sustainable energy by manufacturing mainstream electric vehicles in the motoring industry. Tesla operates in two separate segments: automotive and energy generation and storage. The automotive segment involves manufacturing, development, design, sales, and leasing electric cars. This segment also involves rendering services, such as non-warranty after-sales vehicle services, retail merchandise, vehicle insurance, and the sale of used vehicles (Tesla, 2022). The energy generation segment involves manufacturing, installing, and leasing solar energy generation and storage products (Tiwari, 2017). After the companys IPO, the companys shares have grown exponentially with growing demand for the Tesla vehicles and increased awareness about carbon emissions from gas-powered vehicles. The changing preferences for electric cars have made Tesla the preferred vehicle of choice for people earning more than $100,000 annually.

After going public in 2010, Tesla shares surged to $23.89, a 41% increase in value, while the initial offering was at $17. A decade later, the stock prices have risen by 4,125 %, with an expansion of the companys operations and successful launch of vehicles, such as the Model S, Model 3, and the Plaid. In the last two years, the share prices have been highly volatile with the economic unpredictability that the Corona Virus pandemic has caused. The ability to offer high performance and range between recharge compared to some of its competitors, such as V.W., BMW, Ford, and G.M., has led to the acquisition of the leading market share in the electric vehicles segment at 66.3% in the last quarter of 2021 (Tesla, 2022). Notably, this has declined from 79.5% in the last quarter of 2020.

Tesla has had challenges with the production of ordered cars since it operates with a Just-in-time production philosophy, leading to delayed deliveries or releases. The lack of manufacturing capacity to meet the demand for Teslas cars has been a core challenge, making companies entering the market segment with a faster production chain pose high competition. There have been continued efforts to expand production with the investment in new manufacturing sites across the globe and an expansion of the distribution network. This expansion led to an increase in Teslas credit from $598 million in 2013 to $10 billion in 2018 (McDonald, 2021). The debt-to-equity ratio was 1.63%. Despite the burgeoning debt, the companys market valuation as of August 2019 was $38.817 billion.

The entry into the electric cars segment by seasoned car manufacturers has created familiarity with customers transitioning from gas to electric cars that Tesla as a new car manufacturer, does not enjoy. However, Tesla holds the largest market share by expanding its product line by acquiring the luxury vehicles market share (Tiwari, 2017). However, the limited access of Tesla cars for less than $100,000 annual income, enhancing the production systems to lower the cost incurred for the production of each car will make its cars more affordable...

from March 11th, 2021, to March 2022. The y-axis represents dollar stock prices as the dependent variable and the duration on the x-axis as the independent variable. The scatter plot depicts a highly positive relationship between the highest stock prices and time. The scatter plot is non-linear, with the highest stock prices showing a positive relationship with time. Teslas highest stock price was in October 2021. There was a continuous increase in prices until October 2021 from May 2021. The prices were volatile between October 2021 and March 2022. The scatter plot has a strong positive relationship with time, indicating fair volatility in the highest stock prices. There has been a significant climb in the value of stocks and small drops towards October 2021, followed by significant dips in December 2021 and February 2022. There were noticeable outliers in October 2021 and February 2021.

Figure 2: Lowest Daily Share Price for TSLA, March 11th, 2021-2022

Figure 2 reveals a scatter plot of the highest stock prices of Tesla Inc. from March 11th, 2021, to March 2022. The y-axis represents dollar stock prices as the dependent variable and the duration (in months) on...

…or unfortunate news about the firm. In the case of Tesla stocks, the volatility is caused by the unexpected earnings by the organization as the company market valuation in the past has grown exponentially and has been characterized by such volatility and a steady increase in the price of the stock after that (Amason, 2011). However, there have been concerns about the growing concern about the companys debt, which the company has been leveraging to expand its production by the construction of new manufacturing plants. To increase the revenue generation in the firm, the company has to employ an innovative approach to production to alleviate the challenges experienced by the customers with delayed deliveries and a high cost that limits the purchase of its products to higher and high-income earners (Tiwari, 2017). Expansion of Teslas target market will make its cars and services more accessible to a larger market in the U.S. and overseas. Employing a cost leadership strategy will make it possible to offer premium products at consumer-friendly prices. Notably, Tesla has taken the initiative to construct new manufacturing plants in the U.S. and China.

Observation of the trends in the Tesla stock is critical to inform the strategy in determining the announcements since they create demand for its stocks. The company enjoys mass attention due to the innovative technology in their cars that attracts that excitement about the company stocks and company stocks, such as the increase in the adjusted closing stock after Teslas IPO (Kolodny, 2020). The spikes in the scatter plot in the first to the third quarter in 2021 correspond to he companys announcements of new products, such as the cyber track (McDonald, 2021). Consequently, such announcements should be planned strategically to product releases rather than releases to facilitate the increase in sales and demand of its stocks. As established, to fuel its expansion, Tesla needs to fund its positions by using ever-increasing share equity or rely on long-term debt raises. In both cases, it results in diluting the earnings per share value or saddling the company with a debt to the equity that will continue to outperform its major competitors. However, investing…