Tuesday, 16 October, 2018

Tesla shares rise despite biggest quarterly loss yet

2017 Tesla Model X 2017 Tesla Model XEnlarge
Andy Castillo | 02 August, 2018, 16:33

Tesla's second-quarter revenue grew by more than $1 billion as the electric auto maker delivered more Model 3 vehicles, but its net loss still rose dramatically as it ramped up production.

And not only was the company's outlook more muted, so was CEO Elon Musk. Still, the company promises to produce 6,000 cars per week this month and expects to product 50,000-55,000 Model 3s in Q3.

The company has yet to turn a profit but this quarter's loss is more than twice as high as in the second quarter past year.

Positive signs that might have contributed to the optimism among investors is that the company's cash burn slowed down, from $745.3 million in the first quarter to $739.5 million, in the second one. The call triggered a stock sell-off and raised questions about Musk's behaviour. Tesla said its capital expenses would be slightly below $2.5 billion in 2018, less than last year's $3.4 billion.

Tesla reported larger than expected losses for the second quarter of 2018 on Wednesday, but it exceeded analyst expectations with $4bn in revenue.

Investors responded very positively: Tesla shares surged as much as 12 per cent in after-hours trading.

Just as the flare-up contributed to a smackdown in Tesla's stock in May, Musk's contrite tone this time around contributed to today's real-time rise in prices.

Tour de France: Alaphilippe’s day out
Up next on Wednesday's Stage 11 is a 108.5-kilometer (67-mile) leg from Albertville to the top of the La Rosiere summit. Quick-Step Floors rider Julian Alaphilippe of France crosses the finish line to win Stage 10 of the Tour de France.

Net loss attributable to common shareholders for the April-June quarter amounted to $717.5 million, or $4.22 per share, which was more than some analysts expected. While Tesla hit the long-delayed target in June, the process put additional strain on the company, forcing it to spend millions to ramp up production.

Tesla said demand for the Model 3 remained strong. Tesla says it built 53,339 cars in the second quarter, of which 18,449 were Model 3s. But Musk said numerous trade-ins it received were mass-market vehicles, including the Toyota (7203.T) Prius and Honda (7267.T) Accords and Civics.

On the call, Musk also said he expects the company to avoid returning to the markets for capital and to be "essentially self-funding on a go-forward basis".

As Tesla looks to real profitability in the coming quarters and years, controlling costs is extremely crucial in the automotive business.

Tesla also said it's working on a new version of its Autopilot semi-autonomous software that will have greater safety features.

Tesla management has previously predicted that it would turn a profit sometime in the third quarter.

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