Tesla rallies after reporting better-than-expected quarterly revenue (TSLA)

  • Tesla rallies after reporting better-than-expected quarterly revenue (TSLA)

Tesla rallies after reporting better-than-expected quarterly revenue (TSLA)

The electric vehicle company founded by billionaire Elon Musk reported an adjusted net loss of $717 million for the period on revenue of $4 billion. But investors didn't freak out. Capital expenditure is expected to fall $900m to about $2.5bn this year and Tesla had $2.2bn in cash and equivalents.

Shares of Tesla rose as much as 3.8% in after-hours trading Wednesday following the electric vehicle maker's second-quarter earnings report that showed a greater loss than what Wall Street had expected, on better-than-anticipated revenues. Despite the unusual online behavior, Tesla has made $4 billion for Q2, compared to $2.78 billion for the same quarter a year ago.

Shares dipped immediately after the release, before rallying back into the green in after-hours trading.

For nearly a year, Tesla followers fixated on the company's target to make 5,000 Model 3s in a week. But the company burned through only about $430 million of its cash on hand, leaving it with $2.8 billion in its reserves.

The company said it maintained its level of production, producing 5,000 Model 3s in a week multiple times in July.

Thus far, Tesla has only produced higher-cost versions of the Model 3, starting at about $49,000. Tesla said in its shareholder letter that the Model 3's gross margin "turned slightly positive" in Q2, and the boost in production could move that figure up to 15 percent by quarter's end.

The company has struggled to deliver the Model 3, which critics have celebrated as a "modern marvel", at a price cheap enough to win over new buyers who have been priced out of Tesla's luxury line.

But analysts have said in recent weeks they thought demand for the Model 3 might be waning because of long wait times.

"I was impressed with their negative free cash flow", said David Kudla, CEO of Mainstay Capital Management, which is betting against Tesla.

The company's net loss more than doubled from the same quarter a year ago, and was slightly more than the loss in the first quarter of 2018.

Some analysts viewed that claim optimistically.

It now has its sights set on 6000 Model 3s per week, with the goal of topping 10,000 at some stage in 2019. "Insights into the quality and quantity of the reservation pipeline, while boring, would provide investors with confidence with profitability projections".

The automaker completed a broad restructuring during the quarter, including layoffs affecting 9% of Tesla's employees.

The electric auto maker said it will continue to ramp up production of the Model 3, forecasting a weekly rate of 6,000 vehicles by late August.

Maybe Musk is exhausted after the huge effort Tesla has taken to ramp up its auto production - like adding a massive tent factory outside its vehicle plant in Fremont, California.

On Wednesday's call, Musk apologized to analysts.