Shares of Tesla Inc. (TSLA) are higher at the start of Monday trading, giving even more alpha to its performance…
Shares of Tesla Inc. (TSLA) are higher at the start of Monday trading, giving even more alpha to its performance this month.
In view of Monday morning’s movement, the Tesla share has increased by 10% so far this month (and much more from its low levels) compared with S & P 500 and Nasdaq, which is respectively 8.2% and 10.3% respectively. The main part of this rally comes from Tesla’s earlier results than expected and much better – expected earnings for the third quarter.
The company churned out significantly more free cash flow and earnings per share than analysts were expecting, while increasing revenue expectations as sales increased by 1
29% compared with the year before. This follows Tesla’s strong production report for the quarter released earlier this month.
All this news was melted by one of Tesla’s largest shareholders, who said they would be willing to take a larger stake in the company. This is what helps Tesla increase by 3.5% to $ 343 at Monday’s trading at dinner.
Many may not be aware of Baillie Gifford, but it is one of Tesla’s largest shareholders. Specifically, the company owns more than 7.7% of the share, just behind Fidelity’s 12.35% share. In total, Musk owns more than 20% of the share, making Baillie Gifford the second largest institutional owner and the third largest.
So how are they?
In spite of the armed analyst community, Baillie is busy. Partly because of the vision and ambition of CEO Elon Musk, Nick Thomas, a partner at Baillie Gifford, said his company would be willing to increase its efforts. The latest quarterly figures can not harm the company’s prospects. “If he needs more capital, we would be willing to save him,” says Thomas.
Baillie Gifford’s willingness to increase its share in Tesla is not surprising, as just this month, the company took an 11% stake in NIO (NIO), which recently made its public debut on NYSE.
Nor is the stock price a report that Mercedes-Benz parent Daimler (DDAIF) does not exactly work against Tesla sometime down the line. It is obvious that the automaker is not looking for any partnerships or investments with Tesla at this time. It is worth noting that Daimler held a 4% stake in Tesla before selling it in 2014.
CEO Dieter Zetsche does not regret selling his position but said that “it does not exclude cooperation in the future” when speaking in the Paris Auto Show.
This comes as Mercedes, Porsche, Audi, BMW and others end up rolling out competitive electric cars. The only problem is that, despite having many years of catching up with Tesla and significantly larger R & D budgets, they fall below what Tesla’s comparative vehicles have to offer in many important categories. In some cases, specifications are comparable and in other cases they fall short. But one would have thought that Mercedes, Porsche and others would have better performance considering time and economic factors.
As Tesla won a $ 311 million profit and generated over $ 880 million in free cash flow last quarter, other companies may see Tesla as a less risky entity. Not just for investment purposes, but when looking for a partner to work with. No one wants to work with a partner who goes up in the stomach, right?
The Tesla Supercharger Network may be an attraction, its technology may be different. For Daimler, we do not know whether or why automaker may want to work with Tesla in the future, but there are some opportunities along the way.
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