Tesla’s 2013 Profit: How One Quarter Changed Everything

🔥 This Week’s Insights:

• Stocks hit new highs as AI and global policy drive a surge—are you positioned for the ride?

• Next Week on the Unlock Investing Podcast: Unlock the secrets behind the S&P 500, Dow, and Nasdaq—understanding them could change your investment game.

• This Week’s Practice Problem: How did Tesla’s first profitable quarter in 2013 impact its stock, and what does it mean for investor sentiment today?

WHAT THE MARKETS TAUGHT US THIS WEEK:
📊 Stocks Hit New Highs: Here’s Why It Matters

The S&P 500 and Dow soared to new highs this week. Nvidia led the charge with gains fueled by AI demand, while China’s stimulus plan boosted U.S. companies tied to global commodities like copper.

As tech stocks and global policies aligned, the broader market surged, showing how interconnected economies drive performance.

Key lesson: Pay attention to global trends—they ripple through markets faster than you think​.

STOCK INVESTING MYTHBUSTERS:
💥 Myth: You need to be a financial expert to invest.

Reality: You don’t need a PhD in finance to succeed in the market. Basic principles like consistency and patience often outperform complex strategies.

 UNLOCK INVESTING SCHOOL:
💡Tesla’s Turning Point: The 2013 Profit Announcement

I still remember when Tesla first reported a profit.

It was 2013, and up until that point, Tesla was more of a curiosity than a major player in the automotive world. Sure, people were talking about electric cars, but Tesla’s ability to become profitable was a massive question mark. Could they really disrupt an industry as massive as auto manufacturing?

And then came Q1 of 2013.

Tesla reported its first-ever profitable quarter. The company posted $11.2 million in net income for the quarter, and suddenly, things started to change. Investors, who had been watching Tesla from the sidelines, began to take notice. The stock price shot up like a rocket—Tesla’s shares surged more than 24% in just two days after the announcement.

For a little context, before this moment, many investors were skeptical. Tesla was known for its ambitious goals, but it was also bleeding cash. It was expensive to produce cars, and scaling seemed almost impossible. But that Q1 2013 report changed everything.

It wasn’t just about the profit—investors saw potential. They saw the dream of an electric car future as a real possibility. Tesla had also announced that it had delivered a record number of its Model S cars, a fact that likely gave Wall Street more confidence in its business model.

But here’s the thing—profits aren’t the only indicator of a stock’s success. What this quarter did was change the sentiment. Investors, who were initially cautious, began to bet on Tesla’s future. They started to believe that this wasn’t just a niche car company; it was the beginning of something much bigger.

I wasn’t an early Tesla investor myself. I was still in business school, and I remember how some of my peers who took the leap early were feeling pretty good about their retirement plans. By the time I bought into Tesla, it was right before one of its major stock splits. The company was booming, but now, it’s facing different challenges.

Elon Musk keeps promising big things like robo-taxis, but delays are a real issue. Add to that the competition from cheaper electric vehicles, especially from China, and Tesla isn’t exactly an easy bet today. But, if you’re thinking long term—10 to 20 years—the company still has a shot at leading the EV revolution.

If you take one thing away from Tesla’s 2013 profit, it’s that sometimes sentiment can shift overnight. And that sentiment can drive a stock price higher—sometimes way higher than anyone expects.

📝 Practice Problem: Let’s Apply This!

1. Look up Tesla’s (TSLA) stock price in April 2013. How did the price move in the days following the profit announcement? What does this tell you about how investors react to positive earnings reports?
   

2. Compare Tesla’s stock performance over the past year to its competitors in the EV space. How does it hold up against companies like Rivian or NIO?

3. Tesla’s first profit was small—$11.2 million. Why do you think such a relatively small profit caused such a big jump in stock price?
   

4. If Tesla hadn’t reported a profit in Q1 2013, what do you think would have happened to its stock price? Would it have dropped further, or remained stagnant?
   

5. Based on current market conditions, do you think Tesla is a stock worth holding for the next 10 years? Why or why not?

🧠 Practice Problem Hint

When looking at stock price movements after earnings reports, consider not just the immediate price change, but also the volume of trades. A significant price jump with high trading volume shows strong investor sentiment.

✨ Sharpen your finance knowledge and skills by tackling the challenge!

NEW THIS MONDAY ON THE UNLOCK INVESTING PODCAST:
🎙️ The Power Trio: How the S&P 500, Dow, and Nasdaq Drive the Market

Next week, we’re breaking down the real meaning behind the S&P 500, Dow Jones, and Nasdaq. You’ll learn how these indices impact your portfolio—and why understanding them is key to becoming a savvy investor.

Don’t miss it—this episode could change how you see the market forever!

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Thanks for reading.

Keep learning and see you next week 👋

Important Disclaimer: The content in this newsletter is for educational purposes only and does not constitute financial advice. All information provided is based on my personal opinions and experiences and should not be taken as a recommendation to buy, sell, or hold any financial instruments. Investing involves risks, including the potential loss of capital, and you should always conduct your own research or consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.