Achieving Profits for 4 Consecutive Quarters... Meeting Inclusion Criteria
Earnings Surprise Despite 2nd Quarter Loss Concerns
[Asia Economy New York=Correspondent Baek Jong-min] Electric vehicle company Tesla achieved a surprise profit in the second quarter. It was an 'earnings surprise' that exceeded market expectations of a loss. Tesla recorded profits for four consecutive quarters, meeting the conditions for inclusion in the S&P 500 index.
On the 22nd (local time), Tesla announced a net profit of $104 million for the second quarter. Earnings per share were $2.18. This performance greatly exceeded the market expectation of a $0.19 loss per share. Tesla was expected to have poor results in the second quarter due to the suspension of operations at its California factory caused by the COVID-19 pandemic.
Quarterly revenue was $6 billion. Although sales decreased by 5%, they exceeded the market expectation of $5 billion by $1 billion.
Tesla's strong performance is attributed to a surge in Model 3 vehicle sales in China and other markets. Compared to competing automakers who struggled due to COVID-19, Tesla also succeeded in defending its performance.
MarketWatch reported that Tesla met the conditions for inclusion in the S&P 500 index by recording profits for four consecutive quarters. Tesla's stock price has been rising recently amid speculation about possible inclusion in the S&P 500 index. If included in the S&P 500 index, large funds and benchmark-tracking investments are expected to flow in, potentially driving the stock price even higher.
However, Tesla's inclusion in the S&P 500 index is not automatic. The index inclusion decision is made by the S&P Dow Jones Indices Index Committee, which considers inclusion criteria as well as sector representation and funding availability.
Tesla's stock price has soared 50% just this month, continuing its upward trajectory. After the earnings announcement, it surged another 6% in after-hours trading.
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