Tesla Post Big Quarterly Loss as its Electric-Car Sales Team
Tesla surprisingly weak electric car deliveries in the first quarter took a heavy fee on the bottom line.
The company said on Wednesday that it lost $ 702 million in the first quarter, a sharp reversal from the profits it made in the second half of last year. The loss, equivalent to $ 4.10 per share, was far greater than $ 1.81 per share that Wall Street analysts surveyed by FactSet had expected. Quarterly revenue of $ 4.54 billion fell well below expectations.
Tesla had $ 2.2 billion in cash at the end of the first quarter, down 40 percent from the year-end figure. The company spent $ 920 million on paying a bond loan in March. Tesla's business spent $ 640 million in cash in the first quarter.
Investors had tightened the red bleach after Tesla said it sold 31 percent fewer cars in the first quarter than in the fourth quarter of 2018. The company said logistics challenges had hampered model 3 sedan deliveries to Europe and China. A reduction in a federal tax benefit for Tesla's buyers may have weighed on model 3 sales in the United States.
Another weak point for the company was the solar heating industry where sales fell by more than 35 percent in the quarter. [19659002] "We expected weak results, but Tesla's income and profits were fantastic," says Vicki Bryan, CEO of Bond Angle, a research firm, in an email. "The proceeds were soft, but spiking costs for obvious strategic errors made real blood in the bottom line."
The big question for Tesla is whether the fall in car sales in the first quarter was a temporary phenomenon or something more serious. Model 3 sedans sales can recover when the company supplies cars overseas. But the demand for the more expensive models S and Model X ran 56 percent in the first quarter from the fourth, even though the company reduced the price of the cars at the end of February.
Tesla said on Wednesday that the reduction in tax credit may have weakened demand for model X and model S. The company added that after the price decline, the order increase for high-end versions of these models exceeded the available offer. Tesla also hopes that buyers flock to new versions of S and X that can travel at full cost.
In an investor call after the results were announced, a stock analyst asked why Tesla cut prices if the demand was strong for its products. Tesla's CEO, Elon Musk, responded that the goal was to make the cars "as affordable as possible."
Analysts had entered their earnings estimates in recent weeks, and after the anemic delivery numbers, Tesla again doubts that it can achieve its goals and meet Wall Street's financial goals. The company's share was little changed in extended trading after the earnings announcement, but it is down to over 30 percent from the last high.
Tesla said on Wednesday it expected to deliver between 90,000 and 100,000 cars in the second quarter, up from 63,000 in the first three months of the year. It said it would lose money again in the second quarter, but less than in the first quarter, and would get a profit in the third quarter.
Tesla's trailer hopes that the Model 3 sales will increase and enable the company to meet its target of delivering 360,000 to 400,000 cars this year. Tesla confirmed that goal on Wednesday, but said that car production would be "significantly higher than deliveries" because of the time it takes to transport cars from California to other countries.
Next month, the company plans to sell a $ 35,000 version of model 3. The lower price may increase the demand for car, but charging less may make it more difficult for Tesla to make money from the vehicle.
Tesla's cash position is crucial for the company's future. Mr. Musk intends to produce new cars in volume, including a large truck called Semi, but setting up the new production facilities will consume large amounts of cash. Many analysts expect Tesla to issue new shares to raise money.
Herr. Musk, who had previously said the company did not need more capital, showed that he had changed because Tesla was now able to use capital more effectively. "There is profit on the idea of raising capital at this point," he told analysts.
