Tesla Rebounds as Musk Promises Double Production for 3rd Quarter
- By Holly LaFon
Shares of Tesla (TSLA) surged 8.46% Monday afternoon in their best day since July 16 after CEO Elon Musk sent an upbeat email to employees promising record performance.
Tesla traded around $285.50 per share, raising the stock back above its price of $280.95 at close last Thursday, before Musk appeared to smoke marijuana on a talk show and its chief accounting officer resigned. The events had sent the stock down 6.3% through Friday.
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The intrinsic value of TSLA
"We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter," Musk wrote in the email.
Doubling production would prove a sizable growth spurt for the company, though it has been ramping up manufacturing this year, increasing vehicles produced by 55% sequentially to a record 53,339 in the second quarter. In the first quarter, it had increased the number by 40%.
In the same email, Musk also announced restructuring among the company's senior management, after talks with Tesla's board of directors. The company promoted Jerome Guillen to president of automotive after eight years with the company, where he will "oversee all automotive operations and program management, as well as coordinate our extensive automotive supply chain." Formerly, Guillen was responsible creating the assembly line for the Model 3 and served as Tesla's first Model S program manager before rising to head of all vehicle engineering and worldwide sales and service.
Tesla raised Kevin Kassekert to VP of People and Places, replacing Tesla's chief people officer, who resigned for personal reasons.
The email mentioned five more management changes, including a vice president of Gigafactory operations.
Investors will be looking at vehicle production numbers in third quarter results in October, but Musk has also set other targets. In the first and second quarters' results, he said the company would generate positive GAAP net income and free cash flow in the third and fourth quarters, despite higher tariffs for vehicle imports to China and on components purchased from the country. If he makes the goal, it will be the company's first quarter of profit.
Supporting Tesla's path to their goals were positive sales figures this month. In August, Tesla's Model 3 became the fifth best-selling car in the U.S. by unit, according to data from InsideEVs.
The company was relatively unpopular in the second quarter with investors GuruFocus tracks, most of whom are value investors. Only two purchased shares, with Pioneer Investments (Trades, Portfolio) increasing its holding 3.05% and Ron Baron (Trades, Portfolio), who has the largest position at 2.49% of his portfolio, adding 0.32%. Five other holders decreased their positions. Only 10 investors hold Tesla, or 6.8% of those tracked.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 5 Warning Signs with TSLA. Click here to check it out.
The intrinsic value of TSLA
