California-based electric-car maker Tesla Motors said it lost $38 million in the third quarter, or 32 cents a share, according to GAAP, on revenue of $431 million.
That was worse than the 25-cent loss that analysts using GAAP had forecast.
Stock price tumbled more than $20, or 11.5%, to $155 in the first three hours of after-hour trading following the close of the Nasdaq exchange.
Tesla prefers to report results using non-GAAP methods — also known as adjusted results — under which it earned an adjusted $16 million in the quarter, or 12 cents a share, beating the non-GAAP forecast of 11 cents. Adjusted revenue was $603 million.
Acknowledging the adjusted results, but saying they weren't good enough, auto-industry analyst Brian Johnson at Barclays told clients in a note Tuesday afternoon:
"Results with somewhat slower ramp of Tesla S deliveries reinforce our view that Tesla had overshot in the past few months and is more properly valued at $141."
Tesla Model S electric luxury car and Tesla founder and CEO Elon Musk at the company's factory in California. (Click Image To Enlarge)
CEO and founder Elon Musk earlier forecast 5,000 Model S deliveries in Q3. The company reported 5,500. Johnson had forecast 5,850.
Tesla on Tuesday predicted 6,000 Model S deliveries in the fourth quarter. Johnson wanted to see 6,603.
Tesla Motors Model S all-electric sedan. (Clik Image To Enlarge)
In a conference call with Wall Street analysts after the earnings announcement, Musk said,
"There is a huge amount of demand in North America" for the company's electric-power luxury cars. But U.S. sales might disappoint because the maker is capacity-constrained, "and we have to start delivering cars to Europe."
He noted that Tesla signed a new agreement with Panasonic for more cells that make up the power-pack of the Model S sedan as well as the Model X crossover SUV coming late next year and a third vehicle, priced about $35,000, after that.
The stock closed regular trading Tuesday at $176.81, up $1.61 or 0.9%.
Tesla Motors Inc (NASDAQ:TSLA) - Share Prices November 5, 2013 Through November 7, 2013 - Google Finance (Click Image To Enlarge)
Share price had been zipping upward since Oct. 30, after a 17% drop during that month. The recent climb came despite comments by Musk recently that the stock was overpriced.
An estimate by Nasdaq, where Tesla shares are traded, said that the stock was trading at a breathtaking 711 times earnings before the after-hours plunge Tuesday.
Karl Brauer, a senior analyst for auto researcher Kelley Blue Book, said.
"Tesla's appeal is based as much on image and reputation as hard financial numbers. The company will likely remain on track, even after this quarter, as the financial darling of the car world."
Selling Tuesday could have been investors locking in profits, rather than losing faith in the company. Regarded more like a volatile tech stock than a car-company stock, Tesla's share-price ride has been a wild one. Its 52-week high is $194.50 and the 52-week low is $29.33.This year, it's up more than 400%.
Musk has said a crossover SUV to be called Model X coming soon will be priced not much more than the Model S hatchback sedan, which starts at about $73,000.
In his quarterly letter to shareholders, Musk forecast fourth-quarter adjusted earningsabout even with third-quarter results.
But he said Q4 free cash flow would be "about break-even," which is a drop from the Q3 $26 million, a record for the company.
Musk said the company's cash on hand at the end of the quarter was $796 million, up $49 million from the previous quarter.
COMMENTARY: Tesla Motors sold only 5,500 Model S sedans, well below the 5,850 forecast, and this setoff some alarms on Wall Street. The financial results were not spectacular for a company whose stock has skyrocketed in value from $37.89 at the end of March 2013 to a high of $193.37 at the end of September 2013. Wall Street really expected much better financial results from Tesla to justify its stock price performance. The result was a drop in Tesla's stock of over 25 points at the end of trading on November 6. The stock took another hit, dropping another 11.39 points on November 7 to end the day at $139.77.
Tesla has yet to generate a profit, and is operating well below its breakeven point, the result is a net loss of $57.75 million for the nine months ending September 30, 2013. This is substantially below the net loss of $306 million for the same period ending September 30, 2012, but this is still a loss, and investors are wondering when Tesla will begin generating a profit.
Tesla Motors Inc - Condensed Consolidated Statements of Operations (In Thousands) - Q3 2013 and Nine Months Ending September 30, 2013 - Tesla Motors (Click Image To Enlarge)
Tesla Motors Inc - Condensed Consolidated Balance Sheets in Thousands - Q3 2013 and Q3 2012 - Tesla Motors (Click Image To Enlarge)
Tesla Motors Inc - Reconciliations of GAAP to Non-GAAP Financial Information - Q3 2013 and Nine Months Ended September 30, 2013 - Tesla Motors (Click Image To Enlarge)
Although Tesla Motors's Model S sedan won Motor Trend Car of the Year in 2012 and garnered Consumer Reports highest grade for a car in 2012, the problem that I see is that Tesla is serving a niche market of mostly affluent, environmentally-conscience car buyers, and you have to wonder just how many Model S sedans it can sell at over $90,000 a pop, in a market that is basically finite in number, with the vast majority of sales in the U.S.
A year ago I predicted that Tesla had to sell 21,000 Model S sedans just to breakeven. The company has already sold 17,700 units through the end of September, and believes it will sell 21,000 Model S sedans by the end of the year. At 17,700 units, Tesla is operating below this level, and hence it is losing money. What is really killing them is that they don't have enough fast charging stations installed and like many automakers, must continue to invest in R&D, to develop new vehicles and improve previous models. For a small carmaker, this is a huge challenge, and a drain on cash.
In short, Tesla simply doesn't have the sales volume at the high-end of the price spectrum with the Model S to sustain its growth, let alone its stock price. However, the company plans on introducing a "moderately-priced" all-electric car that can go 200 miles on a charge, and will be priced starting at $30,000, in order to compete with the Chevy Volt and other electric cars in the mainstream electric market, which is much larger and broader in scope. That car won't be ready for market until 2015 so I see Tesla's stock taking an additional hit in Q4 and most of 2014.
Courtesy of an article dated November 5, 2013 appearing in USA Today
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