Tesla Inc. (NASDAQ:TSLA)

The Return on Equity (ROE) exhibited significant volatility between 2010 and 2025. Initially, the metric demonstrated substantial negative values, gradually improving before experiencing fluctuations in later years. A clear pattern of increasing profitability and equity accumulation emerges, particularly from 2020 onwards, though recent years show a moderating trend in ROE.

Early Years (2010-2015)

From 2010 through 2015, ROE consistently registered negative values, peaking in negativity in 2011 at -113.55% and 2012 at -317.73%. This period coincided with substantial net losses attributable to common stockholders. While stockholders’ equity showed modest growth initially, it was insufficient to offset the ongoing losses, resulting in persistently negative ROE. The negative ROE indicates that the company was not generating profits relative to shareholder investment during this timeframe.

Transition and Improvement (2016-2019)

The period between 2016 and 2019 showed a gradual improvement in ROE, though it remained negative for most of it. Net losses continued, but the magnitude decreased compared to the earlier period. Simultaneously, stockholders’ equity experienced significant growth, particularly in 2016, which began to lessen the impact of the net losses on the ROE calculation. By 2019, ROE had moved to -13.03%, indicating a reduced, but still negative, impact on shareholder investment.

Positive ROE and Recent Trends (2020-2025)

A significant turning point occurred in 2020, with ROE becoming positive at 3.24%. This coincided with the company reporting net income attributable to common stockholders. From 2020 to 2022, ROE demonstrated substantial growth, reaching a peak of 28.09% in 2022. This growth was driven by a combination of increasing net income and a substantial increase in stockholders’ equity. However, ROE decreased to 23.94% in 2023 and further to 9.73% in 2024, and 4.62% in 2025. While still positive, this represents a moderating trend, potentially indicating that growth in net income is not keeping pace with the growth in equity, or that profitability is declining.

Overall, the ROE trajectory reflects a transformation from consistent losses to sustained profitability. The substantial increase in stockholders’ equity played a crucial role in this shift, but the recent moderation in ROE warrants further investigation to determine the underlying causes and potential implications for future performance.