Model 3 demand, higher
revenue propel Tesla shares higher
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[August 03, 2017]
By Alexandria Sage and Aishwarya Venugopal
SAN FRANCISCO (Reuters) - Tesla Inc
reported quarterly revenue that doubled on Wednesday and a loss that was
the electric car maker's largest ever, but its shares rose after
revealing more than 1,800 daily reservations for the Model 3 and
predicting increased Model S deliveries in the second half of 2017.
Shares rose as high as 8 percent to $351.67 in late trade.
Despite a warning by Chief Executive Elon Musk last week that the
Silicon Valley automaker would face six months of "manufacturing hell"
in producing its first Model 3s, investors were enthusiastic over a
remaining $3 billion cash on hand at the end of the second quarter, as
loss-making Tesla spent just shy of $1 billion on capital expenditures,
less than expected.
Still, given the continued build-out of the Fremont factory and Tesla's
Gigafactory battery plant in Nevada, the possibility of continued cash
burn is high. Tesla said it plans $2 billion in capital expenses in the
second half of the year, which would erode its cash cushion to about $1
Musk, however, told analysts on a conference call the company was
considering debt to expand cash on hand, "but not thinking about a
Chief Financial Officer Deepak Ahuja said Tesla's spending was at
"historical highs," amounting to over $100 million per week.
Model S demand was increasing, Tesla said, adding that Model S and X
deliveries would rise in the second half of 2017.
Musk said investors should have "zero concern" that Tesla would fail to
reach its production target of 10,000 vehicles each week by the end of
Bullish investors - who sent Tesla's share price up 77 percent from
January to a June high of $386.99 - are betting on Musk's strategy to
transform the low-volume automaker into a clean energy and
transportation company offering electric semi-trailer trucks, rooftop
solar energy systems and large-scale battery storage.
[to top of second column]
The interior of the Tesla Model 3 sedan is seen in this undated
handout image as the car company handed over its first 30 Model 3
vehicles to employee buyers at the company's facility in Fremont,
California, U.S. on July 28, 2017. Tesla/Handout via REUTERS
MODEL 3 ORDERS
Tesla's results came within a week of Tesla's long anticipated Model 3 launch,
where Musk revealed that first off the production line would be a $44,000
version of the car with a 310-mile (500 km) range. That is significantly higher
than the $35,000 price most customers were anticipating, before incentives. That
base model will begin production in January.
Elon corrected a statement he made at the event that Tesla had booked over
500,000 net reservations for the Model 3, changing that to 455,000.
Tesla will begin delivering Model 3s to non-employees in the fourth quarter, it
As production improves, the non-GAAP Model 3 gross margin should be positive in
the fourth quarter, Tesla said, eventually growing to 25 percent in 2018.
Revenue in the quarter rose to $2.79 billion from $1.27 billion, beating
analysts' average estimate of $2.51 billion, according to Thomson Reuters
Excluding items, the company lost $1.33 per share.
The company's net loss attributable to shareholders widened to $336.4 million,
from $293.2 million a year earlier. (http://bit.ly/2uXmTL2)
On a per share basis, net loss attributable to shareholders narrowed to $2.04
(This story has been corrected to show Tesla spent capital expenses of $1
billion, not $1 million, in latest quarter.)
(Reporting by Aishwarya Venugopal in Bengaluru and Alexandria Sage in San
Francisco; Editing by Sriraj Kalluvila, Bernard Orr)
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