This is The Takeaway from today’s Morning Brief, that’s possible to register to receive in your inbox every morning, along with:
Elon Musk has told investors that Tesla “should be seen as an AI or robotics company” that will “solve autonomy.”
We’ve previously debated whether Tesla is indeed a car company and how it should be valued.
What seems clearer after Tesla’s latest earnings report is that Tesla is primarily a car company for now, and the more successful a car company is, the more investors will give it to transform.
The numbers help tell the story: Tesla’s auto revenue last quarter was $20.02 billion, a full 79% of the total. Auto services accounted for 11%, and energy generation and storage about 9%.
It was profitability that really encouraged investors last quarter, reaching 17.1% for non-supervisory credits in the automotive segment. That, plus Musk’s prediction that deliveries will rise this year and growth next year will be “about 20% to 30%,” sent the stock up 22%, marking the biggest one-day gain since May 2013 marked.
It sent Tesla shares into the green again this year, after a bumpy road. In the two weeks since the company’s robotaxi event, the stock was down 11%. Even Tesla bulls like Morgan Stanley’s Adam Jonas were baffled by the lack of specific details for the company’s robotaxis and cybervans, raising eyebrows at demo robots that were reportedly remote-controlled rather than piloted by AI .
The tech world has given us many examples of moguls steering their companies toward profits only to be crushed by Wall Street when their existing businesses suffered. Meta is a good example of this: after Mark Zuckerberg changed his name from Facebook and spent a lot of money on the metaverse, he corrected course with a ‘year of efficiency’, which not only cut expenses but also accelerated revenue again . In this case, Tesla’s profitability improved in part due to a focus on lowering the cost of making vehicles.
My colleague Hamza Shaban wrote in yesterday’s Morning Brief that Musk’s cult is fueled by his alleged distractions, including campaigning for Donald Trump and non-stop X-posts. That may be true for the fanboys and true believers. For the number crunchers and institutions that buy his shares, it helps make more money.
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