Tomahawk, WI 8/09/2013 (Basicsmedia) – Tesla Motors Inc (NASDAQ:TSLA) was founded in 2003, and has its headquarters in Palo Alto, California. The company majorly deals with the designing, development, manufacturing, and selling of electric vehicles as well as the components of electric vehicle powertrains. This company has more than 30 stores located all over North America, Asia, and Europe to serve the needs of its clients. A few of the competitors it has to deal with include Toyota Motor Corporation, general Motors Corporation and Pininfarina S.p.A. But how profitable is the company, and do investors love it?

Profitability of Tesla Motors

When the financial results of TSLA for Q1 2013 were released, it was discovered that the company has made profits, regardless of how tiny this amount was. This is a strange occurrence since the company was never known for profits for quite some time, and investors had started voicing their dissatisfaction with TSLA. The challenge facing TSLA is whether it can continue on the same path of profitability for an extended period of time. It would be quite disheartening if it was to emerge that the Q1 2013 profits were only a one-off and not to be expected in future.

How Should Investors Respond to this News?

Investors can get too excited that they fail to see the bigger picture and continue ploughing their money into TSLA without adequate evidence as to whether they will get anything in return or not. My advice to TSLA investors would be that they must learn to trade cautiously but with a lot of optimism. This is a company which you should not give up on by getting rid of its shares which you hold. In the same vein, you should not dash off to buy as many shares of TSLA as you can get your hands on, simply because it has declare profits after a lengthy period full of losses.

The question which needs to be answered is whether the company will be able to maintain similar levels of growth like it did in Q1 2013. It owes a large percentage of its profits to the fact that it was able to sell cars which are sold at premium rates, in the range of $95,000 – $115,000. The cars it sold were premium and this may not always be the case going forward. It is worth noting that the company has also reported good revenue from sale of credits. However, this is another aspect which may go down as the company continues trading thus lowering profits.


This image, courtesy of shows TSLA Growth Strategy.

What is TSLA’s Growth Strategy?

Investors can only respond well to TSLA shares and stock if they can see a clearly developed and well designed growth strategy. Fortunately, TSLA has such a growth strategy, where it undertakes to give more focus and attention to the development and sale of electric sports cars. It also intends to assign some of its resources into seeing whether it is able to come up with either affordable or more affordable electric cars. As I stated much earlier in this article, my advice to investors is to tread with cautious optimism when dealing with TSLA shares and not be hasty.

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