Tesla Motors Inc. (TSLA) fell after the electric-car maker reported first-quarter Model S sales growth that was below top-of-the-range analyst expectations.
Quarterly deliveries rose to 6,457 cars, from about 4,900 a year ago. While that exceeded the average of seven analysts' estimates, it was less than the highest estimate of as much as 6,600 units. Tesla said tight battery supply, which restrained growth, will continue through the current quarter. The shares fell 7.3 percent to $186.75 at 5:10 p.m. New York time.
The delivery result "beat, but not by as much as people expected them to beat," said Andrea James, an equity analyst with Dougherty & Co., who rates Tesla a buy. "Overall these look like good results at a first glance."
Excluding some items, Tesla earned 12 cents a share in the quarter, the company said in a statement on its website. That matched the adjusted profit that the Palo Alto, California-based company reported a year earlier and exceeded the 7 cents a share profit average of estimates compiled by Bloomberg.
The youngest publicly held U.S. carmaker, led by Elon Musk, has been on an aggressive growth plan since its first profit a year ago sent the stock soaring. Tesla rose fourfold last year and 38 percent this year through yesterday. The company started selling cars in Europe last year and in China last month. Sales in Asia aren't reflected in first-quarter results.
Battery Supplies
Musk had said in February that tighter supplies of batteries and China-bound shipments of its flagship Model S would hold deliveries in the quarter to about 6,400 units. Tesla's year-earlier profit was aided by a surge in California zero-emission vehicle credit sales and savings from the early repayment of a federal loan.
Musk, 42, in February announced plans for the world's largest lithium-ion battery factory that he said could cut Tesla's pack cost by at least 30 percent, and produce cells for stationary power-storage devices. Panasonic Corp., a Tesla shareholder and its main lithium-ion cell supplier, hasn't committed to investing in the "gigafactory."
Panasonic Letter
"We have a signed letter of intent from Panasonic," Musk said on a conference call today. Talks continue for a final agreement, J.B. Straubel, Tesla's chief technology officer, said in the call.
The project "is on course to begin battery cell and pack production in 2017," company said today. Musk has said the company is looking at sites in Arizona, Nevada, New Mexico and Texas, and hasn't yet selected a single site. Tesla will begin work in multiple locations to minimize the risk of delays, Musk said.
"We are going to start work on at least two locations in parallel in order to minimize risk of delays arising after groundbreaking," Tesla said today.
On a GAAP basis, Tesla lost 40 cents a share, and said its net loss was $49.8 million.
Tesla said it will be marginally profitable on a non-GAAP basis in the second quarter, even as research and development costs rise 30 percent from the first quarter. Battery-cell supply will continue to constrain production through the first half before improving in the third quarter.
The share price decline results may result from the "overall market weighting and expectations of a bigger delivery number next quarter," said Ben Kallo, an equity analyst with Robert W. Baird, who rates Tesla outperform. "Also operating expenses continue to increase, but that's to be expected for such rapid growth."
No California Credits
While the company said it had no revenue in the quarter from California zero-emission vehicle credit sales, it generated $12 million from selling credits related to the U.S. Corporate Average Fuel Economy regulations. Tesla also had a charge in the first quarter of $2 million to retrofit Model S battery packs with titanium shields for extra safety in the event of a crash.
The company is now making 700 Model S cars a week at its factory in Fremont, California, near San Francisco. By the end of the year, Tesla expects to assemble 1,000 vehicles a week. The company said it's on track to deliver more than 35,000 vehicles this year.
Tesla forecast a "slightly" negative cash flow for the year.
Second Quarter
In the second quarter, Tesla said production will probably rise 13 percent to 19 percent from the first three months of the year with deliveries rising to about 7,500. The company forecasts being marginally profitable on an adjusted basis for the April-to-June period. Adjusted gross margin may increase slightly from the first quarter's 25.4 percent.
Deliveries of Model S cars with right-hand drive begin in the U.K. in June, with Hong Kong and Japan to follow, the company said.
Tesla said it wants to grow its business in China as fast as possible, including the installation of a large supercharger network.
Design prototypes of the Model X crossover-utility vehicle may be ready in the fourth quarter, Tesla said.
(Earlier versions of this story corrected the second-quarter forecast to a non-GAAP basis, the amount of the first quarter net loss and the period of the results.)
To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net
To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring
Source : http://www.bloomberg.com/news/2014-05-07/tesla-falls-as-model-s-sales-short-of-highest-estimate.html
