? asked in Business & FinanceInvesting · 2 months ago

How do large companies like Tesla survive when they have such negative Net-Income and EPS?

I see companies like Tesla and others who generate massive amounts of revenue, but their Net-Income and EPS always seems to be negative.

8 Answers

Relevance
  • Steve
    Lv 6
    2 months ago

    Buyers drive the market. Theres many buyers of Tesla. Sometimes expectations can alone drive up the price of a company. I think many biotechs also fall under that class. Tesla is likely a big part of the future, so people are looking ahead. Elon Musk certainly isnt hurting for money. The employees of Tesla are getting paid. Most factors are good for Tesla.

  • Lv 7
    2 months ago

    through big bank lending them the money and suckers on stock markets

  • Anonymous
    2 months ago

    For Tesla to give it's investors any return, they would need 100% of all the gross revenue for the next ten years plus they could not spend one dollar for expenses including salaries for their thousands of employees.  That is insanity times 10,000.  This obscenity was made  part of the S&P500 meaning millions of Americans now have it in their retirement, their 401ks, etc. whether they like it or not.  It is only a matter of when, not if, Tesla crashes.  When it does, millions of Americans who had no say in it being in their retirement will be hurt.   Electric cars ARE NOT the future.  Only an idiot would fail to understand the meaning of the word TORQUE.

  • Bryce
    Lv 7
    2 months ago

    Naive fools buy the stock only to get screwed later.

  • How do you think about the answers? You can sign in to vote the answer.
  • kswck2
    Lv 7
    2 months ago

    Remember the Dot Com Bust? That is how. Interest has nothing to do with earnings-or Sustainable earnings. 

  • 2 months ago

    In the first few years of the business, it's acceptable for the business to be unprofitable. But beyond that, a business is worthless no matter how fast it grows if it can't turn a decent profit on a consistent basis. Borrowing money will only buy you so much time before you go bankrupt GM style. Being an automaker at the end of the day is a low profit margin business regardless of whether or not you are building a vehicle with the latest and greatest technology.  

  • Anonymous
    2 months ago

    Electric cars are the future.  The only question is how fast they will be adopted. I will probably never own one as I am 59 and my current car will likely last the rest of my life at my current 3500 miles a year.  A big expectation is not only electric, but driverless cars and most not even owning one, just getting rides every day for every place they go.  

    I would not own Tesla but Ive been wrong many times in the past.

  • Amy
    Lv 7
    2 months ago

    They don't survive for very long.

    A start-up company can have negative earnings because it is spending more on development than it takes in as revenue. It gets money from investors who hope revenue will increase over time.

    A company with substantial reserves from past years of good earnings can withstand a short period of losses during an economic downturn.

    But no company can go on losing money for more than a couple of years. If they don't turn things around quickly, they'll be bankrupt.

Still have questions? Get your answers by asking now.