Famous around the world, and closely tied to its best known personality and current CEO Elon Musk, Tesla was founded by engineers Martin Eberhard and Marc Tarpenning in California in 2003. Musk did not join the company until a year later. Best known for its market-leading electric cars, Tesla works on a very wide range of projects across multiple industries, with a taste for technically challenging and sometimes outlandish targets. Today, it is one of the most highly valued companies in history.
Named after the Serbian electrical engineer Nikola Tesla, the early focus of Tesla was on designing and producing a fully electric high-performance sportscar. This eventually resulted in the Tesla Roadster, the first prototype being launched in 2006 with full production following in 2008. Using lithium-ion batteries, this was the first fully electric car with a range credible to consumers, 250 miles, but uptake was limited by its prohibitive cost. A new focus on building a cheaper model, the Model S, met with significant success. Tesla has been intermittently profitable since 2012, though has faced the criticism that much of its apparent profitability comes from ‘emissions credits’ and other government schemes. In 2021 however, for the first time, Tesla became profitable after removing the effect of credits and tax breaks.
Having survived to that point via loans from the American government alongside other investors, Tesla’s 2010 IPO came when they were desperately short of cash. The IPO was a success, with the stock priced at $17 per share under the ticker ‘TSLA’, raising $226 million in funding. Tesla stock’s price rise since then has been meteoric, crossing the $1000 barrier in the second half of 2021. This has often resulted in the criticism that Tesla’s stock price is so divorced from its earnings it will never become profitable enough to justify it; a claim dismissed by Tesla’s supporters who cite its growing range of vehicles, and investments in new battery technologies and solar power.
The stock is very popular with institutional investors, who hold 48% of all shares, and Musk retains significant ownership with over 20% of shares. Main institutional investors include Vanguard, but also quantitative trading firms such as Susquehanna Group.
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Tesla does not pay a dividend to shareholders. This is typical of technology companies that reinvest excess capital back into their business to fund growth objectives.
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