Amazing business

Yesterday Tesla finished up over 8%, significantly breaking the $200 mark for the stock. If you bought the stock today a year ago, you would have paid ... (wait for it) ... $35 a share. Yes a year ago you could have bought Tesla for $35 and today they are worth $210, so you would have made a cool 500% in a year.


If you haven't heard of Tesla, they are an electric car company selling the first cool and stylish electric car, and are run by one of South Africa's greatest exports, Elon Musk. So why is the stock up 8% yesterday and up 500% for the last year? Tesla are the disrupter in an established industry and are run by one of the greatest innovators of our generation, so people are paying for the companies potential (I also think for bragging rights, nothing like an ego boost to say around the braai that you own Tesla).


The results yesterday beat the already high analyst expectations, their revenue is up 43% compared to the previous quarter with margin growth to 25% from 23% in Q3 (Q1 margins were 14%). So this company is growing at breakneck speed and they are growing margins while doing it. Both those metrics are expected to continue growing, with Europe and Asia market expected to grow and as production numbers increase, economies of scale will improve their margins further.


In terms of their growth, Tesla are a North American based company and in their words, "Towards the end of the year, we expect sales in those regions (Europe and Asia) combined to be almost twice that of North America. To give you an idea of how far ahead Tesla are of the rest of the industry in terms of margins, Fords current gross margin is only 15.5%.


Would I own the stock? Yes. Make no mistake that the stock is very expensive because investors are expecting big things from the company, but I would still have a small part of my portfolio in the stock. Tesla are a pioneering company whose battery technology can be adapted to other industries. Also in the transportation industry Tesla are talking about their driverless car technology being only a couple of years away, and talk of potentially coming up with electric aeroplanes. Elon Musk was one of the founders of Pay Pal and one of his other companies SpaceX is developing rockets and have the goal of enabling people to live in space. Tesla is in the position to not only revolutionise the car, but many other industries and they are led by an innovator who already has a proven track record.