Tesla earnings: company posts surprisingly large losses in delayed report
Tesla posted larger-than-expected losses in its first-quarter earnings report, as the company struggles with production rates and was forced to raise prices on a number of its cars.
The electric carmaker reported a loss of $2.90 a share in its filing, weaker than the $1.30 loss a share experts were expecting. The company’s stock closed out the day at $258.66 a share and prices fluctuated wildly in after hours trading.
Tesla waited more than an hour after markets closed on the east coast to report the disappointing earnings – past reports have occurred within the first half hour of the market close.
The company closed the first quarter with $2.2bn in cash – a decrease from $3.7bn in the previous quarter – and $11.5bn in long-term debt and capital leases.
Wednesday’s earnings showed Tesla produced 63,000 Model 3 vehicles, for which it has struggled in past years to hit production rates, a 3% increase from the previous quarter. It reaffirmed that it expected to deliver 360,000 to 400,000 vehicles in 2019, representing an increase of approximately 45% to 65% compared with 2018. The company expects 90,000-100,000 of those vehicles to be delivered in the second quarter.
Pointing at product changes on the Model S and Model X and global orders for the Model 3, the company said it expected both its order and production rates to increase throughout the year.
The CEO Elon Musk blamed low sales numbers in quarter one on seasonality. “People don’t like buying cars in winter”, he said.
The earnings report comes after a rocky few months for the company. Tesla lost a key tax credit in January. In March, it announced it would reverse an earlier decision to close all of its stores and move to an online-only sales model to reduce costs.
“We will close stores in locations that are hard to find, and continue to add stores in locations where there is high foot traffic for people who are in our target market,” Musk, the company’s founder, said in a call with investors on Wednesday. “When you buy a car you will always do it on your phone.”
The company may have been unable to close many locations due to obligations worth $1.6bn (£1.2bn) on its retail establishments, according to documents seen by the Wall Street Journal.
After reversing the decision to shut down stores, the company also raised the prices of a number of its cars.
Musk himself has been embroiled in a number of scandals, including being fined and sanctioned by the US Securities and Exchange Commission for tweeting that he planned to take the company private and for later tweeting “inaccurate” information about Tesla to his followers.
This month, a video of a Tesla Model S car exploding went viral in China. Despite these scandals and the disappointing earnings report, Musk remained defiant in Wednesday’s call.
“We faced a number of logistical challenges, but overall I feel really good about the way things are headed,” Musk said.
Some analysts remained optimistic about Tesla’s ability to reverse the trend and increase the volume of vehicles shipped in upcoming quarters.
“As is so often the case with Tesla, we’d finish with a note of caution for those prepared to write Tesla off,” Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said.
“Like his cars, Elon Musk doesn’t play by the normal rules, and a dogged determination and loyal shareholder base has so far seen him break the game more often than the game’s broken him.”