Tesla Inc (Nasdaq: TSLA) investors’ recent woes continued on Wednesday afternoon when the company reported a larger-than-expected earnings loss in a third quarter that was marked by Model 3 production delays. Tesla also adjusted its Model 3 production targets heading into 2018.
Tesla reported a third-quarter earnings-per-share loss of $2.92, much larger than the consensus analyst estimate of $2.29. Third-quarter revenue was $2.98 billion, slightly beating consensus estimates of $2.95 billion.
Tesla reported a $1.4 billion loss in free cash flow on the quarter, worse than the $1.2 billion loss analysts had expected. Tesla reported a cash balance of $3.5 billion headed into the fourth quarter.
[See: Car Companies and the Race to Profits.]
Perhaps most importantly, Tesla said it expects to be producing 5,000 Model 3s per week, or 20,000 vehicles per month, by “late Q1 2018.” Tesla had previously said it would be producing 20,000 Model 3s per month by December 2017. In September, Tesla produced just 260 Model 3s, well short of its target of 1,500.
After falling 3.1 percent during Wednesday’s regular session, Tesla stock dropped another 4 percent in the after-hours session.
Kevin O’Leary, chairman of O’Shares ETFs, says Tesla’s market valuation is a head-scratcher for value investors.
“I’m talking about the stock trading at $50 someday,” O’Leary said on CNBC. “I think about 5,000 units [per week] in the automotive world is such a nothing burger. It is such a fractional zero in market share, and yet it’s got this amazing support.”
Sarah Hunt, portfolio manager at Alpine Woods Capital Investors, is skeptical that Tesla will be able to hit its longer-term production target of 10,000 Model 3s per week by the end of 2018.
“To get to 5,000 and then to 10,000 within the time frame that they’re talking about to me seems like an awfully ambitious move on just the production side alone,” she says.
Hunt says Tesla stock is being valued based on promises of a large-scale clean energy ecosystem.
“I think from a valuation standpoint it’s a challenge because people are looking at this and giving it a hall pass on a lot of things, including how much money they lose,” she says.
[See: 5 Automakers to Rev Up a Long-Term Investor’s Portfolio.]
Even after Wednesday afternoon’s earnings sell-off, Tesla stock remains up more than 43 percent year-to-date.
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Tesla Inc (TSLA) Stock Slumps on Earnings Loss, Model 3 Delays originally appeared on usnews.com
