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Surprisingly low deliveries of Tesla's electric cars in the first quarter weighed heavily on its results.
The company announced Wednesday that it lost $ 702 million in the first quarter, a sharp decline from the profits made in the second half of last year. The loss, equivalent to $ 4.10 per share, was well above the $ 1.81 per share expected by Wall Street analysts, questioned by FactSet. Sales for the quarter, at $ 4.54 billion, were well below expectations.
Tesla had $ 2.2 billion in cash by the end of the first quarter, down 40 percent from the end of last year. The company spent $ 920 million to pay a deposit in March. Tesla's operations consumed $ 640 million in cash in the first quarter.
Investors were preparing to use the red ink after Tesla said it sold 31% fewer vehicles in the first quarter than in the fourth quarter of 2018. The company said logistical difficulties prevented delivery of the Model sedan. 3 in Europe and China. A reduction in a federal tax advantage for Tesla buyers may have weighed on Model 3 sales in the United States.
Another weak point of the company was the solar business, where sales fell by more than 35% in the quarter.
"We were expecting poor results, but Tesla's revenue and profit losses are staggering," said Vicki Bryan, general manager of Bond Angle, a research firm, in an email. "The revenues have been low, but the costs induced by obvious mistakes in strategy have caused a lot of money to flow.
The big question for Tesla is whether the decline in car sales in the first quarter was a temporary or more serious phenomenon. Sales of model 3 sedans could recover if the company delivers cars abroad. But demand for the more expensive Model S and Model X vehicles dropped 56% in the first quarter compared to the fourth, as the company reduced car prices at the end of February.
Tesla said on Wednesday that the reduction in tax credit may have weakened demand for X and S models. The company added that after falling prices, the increase in orders for versions high end of these models exceeded the available supply. Tesla also hopes that buyers will be hurrying to new versions of the S and X that can travel further with a full charge.
In a call to investors after the announcement of the results, a stock market analyst asked why Tesla was lowering prices if demand for his products was strong. Tesla CEO Elon Musk said the goal was to make his cars "as affordable as possible".
Analysts have cut their earnings estimates in recent weeks, and after abnormal shipments, Tesla again doubts that it can achieve its goals and achieve Wall Street's financial goals. Its share has changed little in the prolonged trading after the announcement of the results, but it has decreased by more than 30% compared to its last summit.
Tesla announced on Wednesday that 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. He said he would lose money in the second quarter, though less than the first, and would make a profit in the third quarter.
Tesla supporters are hoping that Model 3 sales will increase and allow the company to reach its goal of delivering 360,000 to 400,000 vehicles this year. Tesla said the target Wednesday, but said its production of vehicles would be "significantly higher deliveries," because of the time needed to transport cars from California to other countries.
Next month, the company plans to start selling a model 3 version of 35,000 USD. The lower price may stimulate demand for cars, but lower billing could make it more difficult for Tesla to make a profit on the vehicle.
Tesla's cash is crucial to the future of the company. Mr Musk intends to produce new vehicles in volume, including a large truck called Semi, but the installation of new production facilities consumes a lot of money. Many analysts believe that Tesla will have to issue new shares to raise funds.
Mr Musk, who had previously said the company did not need more capital, said that he had changed his mind because Tesla was now able to use the capital more efficiently. "The idea of raising funds is interesting at this point," he told analysts.
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