Course Name, Course Number
Performance of Portfolio with Analyze Future and Stock
This paper is made up of two parts. Part one provides an explanation of the overall performance of the portfolio for the 12 weeks and Part two offers an in-depth analysis of one common stock which is that of Tesla and one future stock which is that of Nat Gas.
A stock is a share in the company`s ownership. It signifies a claim on the earnings and assets of a company. As the investor obtains more stock, the ownership stake also increases. Whether pertaining to equity, stock, or shares, it all implies the same thing. Being able to own a company`s stock denotes being among the many owners of a certain company. Technically, this implies that the investor become an owner of the company as well. Being an owner, the buyer of stock also shares in the earnings of the company and has the right to vote when it comes to any concern related to stocks.
For the most part, stock markets are situated at the central part of financial arrangements. The main purpose of stock markets is to provide a mechanism for changing savings into financing for the genuine sector (El-Wassal, 606). From a conjectural point of view, stock markets can speed up economic expansion by boosting and mobilizing domestic savings as well as enhancing the quality and quantity of investment. Improved savings mobilization has the potential of increasing the percentage of saving and when stock markets apportion savings to venture projects generating more returns, the greater rate of return to investors will transform savings into a more attractive deal (El-Wassal, 606). As a result, more savings will be directed into the business sector. Well-organized stock markets enable companies to compete on the same grounds for funds and assist in making investment more efficient (El-Wassal, 606).
The stock market is a significant source of perplexity for a lot of people. The average individual usually belongs to one of two classifications. The first group believes that investing in a company`s stock is a like gambling and the money invested serves as the bet. These individuals are completely sure that once money is invested in the stock market, it will potentially lead to nothing but losses. Most of the time, these fears are strengthened by the personal encounters of members of the family and friends who experienced the same fates or has experienced the Great Depression. These emotions are not based in facts and are the outcome of personal encounters. A person who has this kind of belief merely is not aware of what really the stock market is all about and the reason for its existence. The second group of individuals are made up of those who are aware of the reasons why they must invest for the long-run but they do not have the idea how and where to start. A lot of these individuals want to invest but they are devoid of knowledge so often, financial decisions are left to professionals. Such form of investment is considered as blind faith or restricted to their personal interpretation.
Business is the keystone of an economy. Most of the big companies begin as a small business and through development they have turned into financial giants. Dell Computer, McDonald`s, and Wal-Mart had overall profits of approximately $10 billion annually. Wal-Mart is the head, the executive, the manager, and the biggest family-owned business that handles chains of other brands and businesses. It is the director, the planner, and the master of all strategies to gain competitive advantage while at the same time earning high profits. It claims to be greatly concerned with the American consumers. Wal-Mart is a retail giant. It has chains of products and services from almost all businesses – big and small. Companies aspire to be part of Wal-Mart for the reason that it covers the largest number of consumers. Wal-Mart does what it believes would be beneficial for the American consumers while at the same time advantageous for the business. It is a tough business with rigid policies and it also expects the rest of the vendors to adhere to what Wal-Mart desires or they will be completely expelled from doing business with the retail giant. Dell computer started with Michael Dell having the hobby of selling computers in his dorm room when he was still in college. Dell is now one of the toughest competitors of Apple Inc. McDonald`s used to be a small food chain. These companies grew because of the stocks they sold. When a business is expanding, the biggest obstacle or challenge is being able to raise sufficient amount of money. Owners usually have two choices to overcome this challenge – they can either lend money from a venture capitalist or from a bank, or sell a portion of the company to investors and utilize the money to financially subsidize expansion.
The genuine stock market is one of the most pertinent resources when it comes to businesses to augment cash. This allows businesses to become candidly exchanged, or even augment extra money with reference to growth selling off stocks related to ownership from the company within a wide-ranging public marketplace. The definite fluid that the exchange provides gives traders the chance to quickly and easily market investments. It is really an attractive purpose related to purchasing shares and stocks in relation to some other less fluid advantages such as real-estate.
Historical past signifies that this connection with stocks together with other supplies is a critical section of the characteristic related to financial action, and may have an effect or even turn out to be a good suggestion related with interpersonal emotion. A robust economic atmosphere in which the stock market is essentially growing is believed to be a good potential economic atmosphere. In point of fact, the tangible stock market is generally well thought-out as the main sign of the state`s fiscal authority as well as development. Augmenting talk about costs, for instance, are generally associated with enhanced company investment resolution and the other way around. Discuss value also has an effect on the practical families and the utilization. Accordingly banks frequently keep close observation of the tangible manage as well as behavior from the stock market and, in general, within the smooth course of action of economic agenda characteristics. Financial balance may be the principles related to banks. Trades also operate as the actual clearinghouse for each single deal, which signifies that these individuals collect as well as offer the stocks, and assure business towards the proprietor of the security. Buying a stock is a form growth investing which refers to investing in businesses in which the value paid for growth is lesser compared to the value of growth (“Growth Investing”). When considering investing, it is essential to take into account market capitalization, PEG ration of less than 1.2, earnings growth 15-30%, debt ratio of less than 35%, institutional ownership of 5 to 65%, dividend yields, and cyclical stocks.
Part One: Portfolio`s Performance
Stock Market Analysis handles the performance of a stock market. The stock market performance is reliant upon the performance of the overall number of stocks that are exchanged in that market.hen the market ends with the costs of majority of its stock on the higher side, then the company is said to have performed well.
In this portfolio, four common stocks were monitored – Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix. Stocks for Tesla Motors were bought at $166.97 each PTC Therapeutics was bought for $19.07 each Apple Computer was purchased at $498.22 each and Netflix was bought for $291.54 each. The stocks were bought on September 6, 2013. Overall, the amount invested for Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix were $16697.00, $19070.00, $24911.00, and $29154.00 respectively. At the end of the first week (September 13, 2013), Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix price value was $165.54, $21.34, $464.90, and $305.65 respectively. At the end of the first week, Tesla Motors, Apple Computer, and Netflix experienced losses of $143.00, $1666.00, and $1411.00 respectively. On the other hand, PTC Therapeutics gained $2,270.00. At the end of the second week (September 20, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $183.39, $17.88, $467.41, and $313.83 respectively. Among the four stocks, only Tesla Motors was able to experience a gain of $1642. PTC Therapeutics, Apple Computer, and Netflix experienced $1190, $1540.50, and $2229.00 loss respectively. At the end of the third week (September 27, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $190.90, $21.37, $482.75, and $312.40 respectively. Among the four stocks, Tesla Motors and PTC Therapeutics were able to experience a gain of $2393.00 and $2300.00 respectively. Apple Computer and Netflix experienced $773.50 and $2086.00 loss respectively.
At the end of the fourth week (October 4, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $180.98, $19.03, $483.03, and $327.26 respectively. Among the four stocks, only Tesla Motors gained $1401.00. PTC Therapeutics, Apple Computer, and Netflix experienced $40, $759.50, and $3,572.00 loss respectively. At the end of the fourth week (October 11, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $178.70, $19.03, $492.81, and $300.85 respectively. Among the four stocks, only Tesla Motors gained $1173.00. PTC Therapeutics, Apple Computer, and Netflix experienced $40, $270.50, and $931.00 loss respectively. At the end of the fifth week (October 18, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $183.40, $19.24, $508.89, and $333.85 respectively. Among the four stocks, only Netflix experienced losses of $4196.00.Tesla Motors, PTC Therapeutics, and Apple Computer experienced $1643.00, $170.00, and $533.50 gain respectively.
At the end of the sixth week (October 25, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $169.66, $20.71, $525.96, and $328.03 respectively. Among the four stocks, only Netflix experienced losses of $3649.00.Tesla Motors, PTC Therapeutics, and Apple Computer experienced $269.00, $1640.00, and $1387.00 gain respectively. At the end of the seventh week (November 1, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $162.17, $17.50, $520.03, and $329.27 respectively. Among the four stocks, only Apple Computer experienced a gain of $1090.50.Tesla Motors, PTC Therapeutics, and Netflix experienced $480.00, $1570.00, and $3773.00 loss respectively. At the end of the eight week (November 8, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $137.95, $16.86, $520.56, and $334.90 respectively. Among the four stocks, only Apple Computer experienced a gain of $1117.00.Tesla Motors, PTC Therapeutics, and Netflix experienced $2902.00, $2210.00, and $4336.00 loss respectively. At the end of the ninth week (November 15, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $135.45, $14.56, $524.99, and $349.76 respectively. Among the four stocks, only Apple Computer experienced a gain of $1338.50.Tesla Motors, PTC Therapeutics, and Netflix experienced $3152.00, $4510.00, and $5822.00 loss respectively. At the end of the eleventh week (November 22, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $121.38, $14.75, $519.80, and $347.85 respectively. Among the four stocks, only Apple Computer experienced a gain of $1079.00.Tesla Motors, PTC Therapeutics, and Netflix experienced $4559.00, $4320.00, and $5631.00 loss respectively. At the end of the last week (November 29, 2013), the price value of Tesla Motors, PTC Therapeutics, Apple Computer, and Netflix closed at $127.28, $15.67, $556.07, and $365.80 respectively. Among the four stocks, only Apple Computer experienced a gain of $2892.50.Tesla Motors, PTC Therapeutics, and Netflix experienced $3969.00, $3400.00, and $7426.00 loss respectively.
Stock prices fluctuate every day due to the various forces present in the market world. One of the prevailing causes of fluctuating price is supply and demand. When more individuals are interested in purchasing a stock rather than selling it, the stock price moves up. On the other hand, when there are more individuals who want to sell a stock rather than purchase, the stock price goes down. Such is the primary reason of price fluctuations. The idea that majority of individuals have a hard time understanding is why stocks are greatly preferred by others. What makes a stock increase is also partly due to media. When there is positive news, people tend to consider buying the stock. On the contrary, when there is bad news, people tend to sell the stocks that they have. People`s concepts and approaches determine the potentiality of stock`s movements. The leading principle is that the movement of a stock price offers an indication of the way investors feel concerning the value of the company. This is embodied by the market capitalization of the company. Another significant aspect of the company is earning, the profit produced by the company in a year. No business can thrive in the absence of profit. A company that does not make money does not survive in the competitive market. Public businesses are encouraged to document their earnings per quarter.
Part Two: Tesla and Nat Gas
Overview of Tesla
In 2003, Tesla was founded with the notion that the lithium-ion technical knowledge utilized in laptops would be used to make a completely electrically-powered vehicle that is not only environmentally friendly but equally eye-catching and exciting to maneuver. The company started soliciting project venture in the year 2004 and had created its first vehicle in 2004 and Tesla made Roadster in the year 2008. The company was able to sell an estimated 1,350 of these cars by the 30th of September 2010. In January 2010, Tesla ensured a long-standing Department of Energy (DOE) Loan Facility to support improvement of EVs, powertrains, and engineering facilities. The DOE loan facility, together with money manufactured from the IPO has allowed for the improvement of the Model S, the procurement and retooling of engineering facility in California, and the widening of the powertrain service in Palo Alto. Model S was launched in 2012.
Tesla Motors is an American company that manufactures electric cars. Tesla Motors trades on the stock exchange using the ticker symbol TSLA. After a decade, Tesla was able to post its revenues for the first quarter of the fiscal year 2013. Tesla is a customary auto industry that is a century old. It is made up of hybrid and electrically-powered vehicle segments. In 2000, there had been a total of 10,000 hybrids while in 2007, there were 325,000. Tesla produces highway-capable zero-emission automobiles. This does not prevent other more recognized producers from attempting to get closer with the lithium ion battery expertise. The Chevrolet Volt was introduced in 2010 and cost over $40,000 while the Tesla Roadster is a luxury car that costs over $100,000, equally assessed before the administration tax credit deduction. Rivalry is a high risk factor to think through if Tesla wants to become cost-effective in the future.
In Tesla, there has been high request for Roadster. There is also a long-standing accomplishment for Tesla. Buyers have the ability to extract profits from seller. Green market starts to emerge and the buyer power is limited due to lack of competition. One of Tesla`s strong points is its electric feature. Thus if the ultimate resolution for the client is to conduct the most advantage for the company, Tesla and Mazda`s hydrogen cars are the greatest persuasive choices.
Tesla thrashed about at the beginning in creating the suitable source market. There were preliminary difficulties with cost, logistical along with business matters that come from dealers being situated across the globe. In addition to this, the possible amplified charges due to the shortage of a consolidated making procedure. The court cases of Tesla made the company earn a number of hard-won understandings. A few of the lessons learned: Ensure that supply-chain, business and manufactured goods strategies are strongly aligned. At the moment, Tesla`s supply-chain directors discuss with professional engineers and together assess costs, functioning with a directed number of reliable dealers. Assess carefully the various external drivers, such as global as well as economic tendencies, customer predilections, and proximity to marketplaces, work prices, dealer superiority, supervisory necessities, environmental sustainability, public accountability and geopolitical changes. Avoid offshore engineering until your manufactured goods has developed and stabilized (Bowman, 2010). As luck would have it for Tesla, seeking the right associates that are eager to handle costs with the intention of helping Tesla become lucrative quickly and alleviated the bargaining power of their buyers. Supplier power encompasses Lotus main outsourcing partner Lithium Ion battery Flexibility to assume new machineries and AC propulsion drive train. Lotus is offering chassis, body and constructing Tesla Roadster at Lotus factory situated in England.
Just in 2003, Tesla is faced with the challenges of being the new fangled player in the market. High resources are needed to start any business spending. Tesla is not expected to be cost-effective for 18 months (Taylor, 2011). There is a comparatively low obstruction to entry because of the higher demand for environmentally friendly cars and other vehicles as well as with other passages for available knowledge for lithium-ion arrays, it is a smooth playing arena where any business can imitate (Shirouzu,2011).
Tesla exemplifies the threat of a persuasive substitute creation to all of the current gas powered car builders. The tempting delivery for a high quality electric vehicle from a company that is outside of the motorized conventional can be perceived as an ideal danger. The petition is Tesla`s manufacture influence that couriers to the pent up request that the community has for an automobile that not simply does not utilize gas, but similarly is entirely electric. The positioning for Tesla cars in terms of price is a little on the extraordinary side associated to the gas motorized cars, but is economical compared to cars such as the Volt and the Leaf.
Tesla Motors was integrated in July 2003 by Marc Tarpenning and Martin Eberhard, who provided financial subsidy to the company. Elon Musk became Tesla`s chairman in 2004. Ever since college, Musk`s main objective was to commercialize electric cars to mass market, beginning with a sports car directed at first adopters and then moved quickly into mainstream cars including compacts and sedans. Musk performed a dynamic function in the company and supervised Roadster design at an intricate level, however was not fully involved in everyday functions Eberhard recognized Musk as an individual who wanted a carbon fiber body right from the start and headed the design components varying from power electronic to headlamps and other styles. Furthermore, Musk was in control of Tesla from financing, providing subsidy to Series A investment of $7.5 million USD using his personal funds. From the start, Musk constantly upheld that Tesla`s strategic objective was to develop reasonably priced electric cars so as to obtain a material contact on oil expenditure. In December 2007, Ze`ev Drori became the President and CEO of Tesla Motors. In 2008, Tesla fired a number of personnel who were found to have participated from the inception following the review made by the Drori. On May 19, 2009, Daimler AG of Germany, manufacturer of Mercedes-Benz, obtained an equity venture of lower than 10% of Tesla for a stated US$50 million. In July 2009, Daimler made an announcement that Aabar Investments in Abu Dhabi purchased 40 percent of Daimler`s interest in Tesla Motors. In 2009, Tesla Motors was given an approval to obtain $465 million USD in loans that bear interest from the US Department of Energy.
The financial support, part of an US$8 billion course for advanced car technologies, bears manufacturing and creation of sedan, as well as the emergence of powertrain technology that Tesla wishes to vend to automakers. The loans are not related to the “bailout” subsidy that Chrysler and General Motors have acquired, nor are they associated with the 2009 economic incentive package. The loan program of the Department of Energy was established in 2007 all through the George W. Bush management so as to obtain more fuel-efficient car choices to U.S. clients and to reduce the nation`s reliance on overseas oil. Tesla reimbursed the loan to the United States government in May 2013. Tesla is the leading car company to have completely reimbursed the government. On August 2009, Tesla Motors made an announcement that it had accomplished the total corporate profitability in July. The company earned almost $1 million USD in profit of $20 million USD. Productivity increased mainly from enhanced gross margin in 2010 Roadster. On July 2009, Tesla was able to ship over 109 cars and claimed an increased in the purchases of Roadster. In September 2009, the company declared an $82.5 million USD round to increase retail expansion of Model S. Tesla signed a contract on July 2005 with Group Lotus to manufacture Gliders for Tesla. The company previously signed a contract with Group Lotus on March 2011 however the two companies revealed that they had prolonged the deal to maintain Roadster production until December 2011 with 2400 units minimum.
2013 Tesla`s Stock Price
On November 2013, following the third quarter disclosure of financial performance, the company`s stock price had a dramatic decrease. Despite being able to beat most projections on the total number of cars sold, stock price reduced by 10 percent overnight and went on to decrease as the weeks passed. On November 7, Tesla`s stock reduced by 5% in comparison to its opening value. Following its reduction by 10 percent on November 18, it seems as if there was some balance at a stock price of $121. The causes of drastic decrease in Tesla`s stock were not conclusive. Some factors provided by market experts differ with some anxious about the battery supply concerns of cars. Other experts believe that the augmented spending in research and development affected future earnings.
Nat Gas Futures
Natural gas is utilized widely across the United States to provide heat for homes and likewise has significant uses in industrial and commercial settings. Natural gas is the same to what is known as asbiogas which is also a substance from methane generated when organic matter was broken down. Since it is a fossil fuel, it is made up of secondary products that should be cleaned out of the methane to make it commercially feasible. Propane, ethane, butane, hydrogen sulfide, and helium are eliminated and are taken as a secondary source of income for refiners. Once taken as an unproductive derivative of oil manufacture, natural gas is gradually seeking a footing in the world today. Environmentally friendly, economical, and proficient, natural gas is known to be the cleanest form of burning fossil fuel, and advancement in technologies are enhancing the manner it is captured, shipped and disseminated.
Based on the 2009 published statistics by the Federal Energy Regulatory Commission, over 96% of the natural gas reserves in the world are found outside the United States, however, 25% of the nation`s energy is derived from natural gas. Natural gas is an efficient source of energy that is disseminated straight from oil field to residential homes. Natural gas is manufactured domestically and distributed to over 60 million houses and is known to be the dominant source in producing electricity as well as giving energy for new houses. In 2005, the United States generated 18.2 trillion cubic feet of natural gas and at the same time used 21.9 trillion cubic feet of natural gas, forming a net deficit of about 3.7 trillion cubic feet.
Since natural gas is hard to keep unless transformed to liquid natural gas, greater sources of it has to be sought to match the people`s demands. Based on the Minerals Management Service and United States Geologic Survey, America has considerable quantity of untapped natural gas reserves.
Factors that Impact the Prices of Natural Gas
The cost of natural gas is affected by factors including but not limited to the following: while natural gas is not to be shipped throughout the globe in pipes, liquid natural gas is obtaining a strong footing in the market. The Gas Technology Institute discharged a report illustrating the cost of generating liquid natural gas reducing by 50% Qatar is known to have the world`s biggest natural gas fields which is projected to 6000 square kilometers and is partly shared by Iran constant unrest in the Middle East as well as strained connection between Iran and the United States puts at risk the capacity for foreign natural gas to be transported safely across the globe and at present, over 96% of the natural gas reserves in the world are outside the United States with 15 countries signifying 84% of the overall natural gas production.
Just recently, natural gas futures reduced by 2 percent in early trading last December 16, 2013 on forecasts due to decreased in heating demand and on profit-taking after costs reaching over seven-month highs the week before. Natural gas futures are dropping due to moderate weather pattern across the country. Last December 13, 2013, the gas reached $4,443, the highest cost reported since May. In the market, gas for transportation in Louisiana was down by 15 cents at $4.21. Gas on the Transco pipeline at the citygate New York had not traded but was noted to bid at $5.50 and presented at $8.50 compared with the average of $7.22 last December 13. Early withdrawal projections for storage from the United States Energy Information Administration varied from 180 billion cubic feet to 229 billion cubic feet compared to the 70 billion cubic feet in 2012 and the five-year average of 133 billion cubic feet. In the United States nuclear news, there were 6,200 megawatts out last December 16, 2013, compared to 6,900 MW out last December 13. That is comparable to 12,400 MW out in 2012 and a five-year average outage rate of 8,200 MW.
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