Tesla record deliveries - To the moon?
This piece of news doesn't come at a better time.
Just as the previous quarters showed weaknesses and price slashes, $Tesla (TSLA.US)$ released strong positive numbers for production and deliveries.
However, since the quarterly results are still a few weeks away, what are the points that investors should take note of?
1. Good deliveries might mean good revenue and margins?
Good deliveries on top of higher selling prices, would definitely translate to higher revenue, and potentially higher margins as well.
This is the flywheel model and assumption, where every incremental amount of car sold and delivered, will contribute in an exponential manner to Tesla's top and bottom line.
2. Good deliveries might mean normal revenues but lower margins?
Now, do note that things can go the other way.
Source: Forbes
Tesla has been on an aggressive price-slashing movement.
Given the fact most of its Gigafactories in Shanghai and Germany are up and running, running the plants full even though selling at a lower price, might turn out to be better than keeping prices high and the plants cannot run full.
This is the basic law of economies of scale.
Losses can be lowered or spread out if production volume is maximized.
And to maximize volumes, the rationale is to lower selling prices to stimulate purchases.
And to maximize volumes, the rationale is to lower selling prices to stimulate purchases.
So what would Tesla's results be like?
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The information available in this article/report/analysis is for sharing and education purposes only. This is neither a recommendation to purchase or sell any of the shares, securities, or other instruments mentioned; nor can it be treated as professional advice to buy, sell or take a position in any shares, securities, or other instruments. If you need specific investment advice, please consult the relevant professional investment advice and/or for study or research only.
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